EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of April 1, 2004, by and between
Porta Systems Corp., a Delaware corporation (the "Company"), and Xxxxxx X.
Xxxxxxxx (the "Executive").
WHEREAS, the Executive is employed by the Company in a senior management
position and the Company wishes to continue to employ the Executive upon the
terms and conditions set forth in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Company
upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and agreements hereinafter set forth, the Company and the Executive agree as
follows:
1. EMPLOYMENT AND DUTIES. (a) The Company hereby employs the Executive
pursuant to this Agreement to render full-time exclusive services to the Company
during the Term (as defined in Section 2 hereof) as the President and Chief
Operating and Financial Officer of the Company or in such other executive
capacity as may be designated by the Chairman or a Board Member designated by
the Company's Board of Directors from time to time. In performing such duties,
the Executive shall be subject to the direction of the Chairman or such Board
Member designated by the Company's Board of Directors from time to time. The
Executive hereby accepts such employment and agrees to devote his full time,
attention and best efforts exclusively to performing the duties described above.
(b) The Executive agrees to perform such duties as may be assigned or
delegated to him by the Chairman or Board Member designated by the Company's
Board of Directors and to be bound by the policies of the Company and its
Affiliates as in effect from time to time. The Executive further agrees to
accept election, and to serve, during all or part of a Term, as an employee,
officer or director of an "Affiliate" as defined in section (6) (f) hereof if
assigned or elected to such position by the Board of Directors of the Company or
by the board of directors or similar governing body of any Affiliate, and to
perform such services for any such Affiliate as may be assigned, without
additional compensation therefore other than that specified in this Agreement.
2. TERM. The Company shall employ the Executive pursuant to this Agreement
for a period commencing on the date hereof and ending on December 31, 2006,
which period shall automatically be extended for an additional twelve-month
period on December 31 of each year after the date hereof while the Agreement
remains in effect unless the Company shall have given notice to the Executive,
at least 90 days prior to such December 31, that it has elected to terminate
this Agreement at the expiration date of this Agreement, subject to the
earlier termination at any time during the Executive's period of employment, as
hereinafter provided (the "Term").
3. COMPENSATION. (a) The Company shall pay the Executive an annual salary
for the services to be rendered by him from the date hereof at an annual rate to
be reviewed by the Board of Directors of the Company ("Board") at least
annually, but which amount shall in no event be fixed at an amount less than the
Executive's annual salary rate last fixed by the Board, payable in periodic
installments in accordance with the Company's regular payroll practices as in
effect from time to time ("Salary"). Effective April 1, 2004, Executive's base
salary has been set by the Board at $210,000 per annum. Notwithstanding the
foregoing, the Executive's salary may be reduced if, and to the extent that, the
salaries payable to all executive officers of the Company shall be reduced on a
uniform or percentage basis.
(b) The Executive shall be entitled to participate in and receive the
benefits under any pension plans, bonus arrangements, health, life, accident and
disability insurance plans or programs and any other employee benefit or fringe
benefit plans, perquisites or arrangements which the Company makes available
generally to other employees of the Company to the extent that the Executive is
otherwise eligible to participate in such plans or arrangements pursuant to the
provisions of such plans or arrangements as they may be in effect from time to
time.
(c) During the period of his employment hereunder, the Executive shall be
entitled to three (3) weeks paid non-cumulative vacation each year or such
greater period of vacation consistent with the Company's policy with respect to
vacation in effect from time to time.
4. TERMINATION OF EMPLOYMENT. (a) The Executive's employment hereunder
shall terminate automatically as of the date of his death or upon the
Executive's termination due to disability determined by the Company's long-term
disability carrier at that time. In the event of termination for death or
long-term disability, the Company shall pay to the Executive's estate or
beneficiary or to the Executive, in full satisfaction of its liabilities
hereunder, a payment equal to three months' salary.
(b) The Company may at any time at its option, exercised by not less than
10 days' written notice to the Executive, terminate his employment for "Cause"
(as hereinafter defined). In the event of termination for Cause, the Company
shall have no further obligations or liabilities to the Executive hereunder. For
purposes of this Agreement, the term Cause means any conviction (or plea of nolo
contendere) of the Executive of a felony or misdemeanor (other than for motor
vehicle or similar minor offenses) under the laws of the United States of any
state thereof; any material breach by the Executive of this Agreement or any
material failure of the Executive to perform his duties hereunder; intentional
dishonesty or gross negligence by the Executive in the performance of his duties
hereunder; the failure by the Executive to comply with any policies of the
Company or any Affiliate for which he renders services; or conduct on the part
of the Executive which damages the reputation of the Company, which achieves
general notoriety with respect to conduct or alleged conduct by the Executive
which is scandalous, immoral or illegal or which is disruptive of the business
and its Affiliates.
(c) The Company may at any time at its option, exercised by not less than
10 days' written notice to the Executive (or pay in lieu thereof), terminate his
Employment prior to the expiration of the Term other than for Cause, provided
that, if the Company so terminates the Executive's employment other than for
Cause, the Executive shall be entitled to continue to receive, as severance,
payment of Salary at the most recent annual rate in effect prior to the date of
such termination for a period of twelve months following the date of such
termination of employment, plus one additional month of Salary at such rate for
each full year of service with the Company however, that in no event shall the
amount of severance payable under this Section exceed a maximum of 36 months'
salary and provided further that the amount of severance payable under this
Section 4(c) shall continue to be paid in the event of the Executive's death
after termination of his Employment. If the annual bonus payable to the
Executive has already been determined by the Company at the time his employment
is terminated other than for Cause, the Executive shall receive a bonus payment
in such amount following his termination of employment. In all other
circumstances, no bonus shall be payable to the Executive under this Section
4(c) following his termination of employment. The Company shall continue to pay
insurance premiums for the same medical and dental health care benefits to which
the Executive was entitled prior to such termination for the period of time
permitted under the relevant policy but no longer than the period of such salary
continuance, provided that the Company's medical and dental health carrier or
carriers are willing to continue to provide such coverage upon the payment of
such premium or premiums.
(d) The parties agree that the severance amount payable to the Executive
pursuant to Section 4(c) shall constitute liquidated damages in the event of
termination of this Agreement by the Company other than for Cause. The parties
agree that the damages payable to the Executive in the event of such termination
would be difficult to estimate accurately, the severance amount bears a
reasonable relationship to the amount of damages anticipated by the parties as
of the date hereof and the severance amount is not a penalty. In reliance on the
validity of this liquidated damages provision, the Company has waived any
obligation of the Executive to mitigate damages by seeking other employment and
the severance amount shall not be reduced by compensation earned in such other
employment.
(e) In the event of the Executive's termination of employment other than
for Cause, the Company shall have no further obligations or liabilities to the
Executive hereunder, other than to make such severance payments as provided in
Section 4(c), to provide such medical and dental benefits as provided in Section
4(c) and to receive benefits under stock plans, life insurance arrangements and
supplemental retirement arrangements in accordance with the terms of agreements
with the Executive on these matters. Upon payment of the amounts provided in
Section 4(c), the Company shall have no further liability of any kind or nature
whatsoever to the Executive under law or this Agreement relating to his
employment. The payment to the Executive under Section 4(c) shall be in lieu of
and in discharge of any obligations of the Company to the Executive for Salary,
bonus, or under any separation or severance pay plan or for other compensation
or expectation or remuneration or benefit in connection with the Executive's
employment or the termination thereof. In consideration for the payments
hereunder, the Executive hereby irrevocably and unconditionally releases and
discharges the Company and each of the Company's successors, shareholders,
Affiliates, directors, officers, employees, representatives, agents, assigns,
attorneys, divisions (and agents, directors, officers, employees,
representatives and attorneys of such successors, shareholders, Affiliates and
divisions) and all persons acting by, through or under or in concert with any of
them from any and all charges, complaints, claims, liabilities, obligations,
controversies, damages, causes of action, costs and expenses of any nature
whatsoever, at law or at equity, whether known or unknown, arising now or in the
future, including but not limited to rights under any federal, state or local
laws respecting the terms and conditions of employment, in connection with the
Executive's employment by the Company and the termination thereof under this
Agreement.
(f) The Executive agrees that he will provide at least six (6) months'
written notice of his intent to terminate this Agreement prior to the expiration
of the initial or any extended term. The Executive agrees that, without the
prior written consent of the Company, he will not take any action, solicit any
proposals, or engage in discussions or negotiations that could be expected to
result in a breach of his agreement in this Section 4(f).
5. COVENANTS. (a)
(i) In view of the fact that the Company is engaged in specialized
businesses, which businesses are conducted throughout the world, and the
information, research and marketing data developed by the Company are
confidential, the Executive agrees that, during the Term and for a period
equal to the period during which payments are made pursuant to Section
4(c) hereof, he will not directly or indirectly engage in the business
substantially conducted by the Company or any Affiliate at the date of
such termination and for which the Executive performed material services
during the period of his employment, either for himself or for any other
person, employer, business or other entity in competition with the Company
or such Affiliate, engage in any such business on his own account, or
become interested in any such business, directly or indirectly, as an
individual, partner, shareholder, officer, director, principal, agent,
employee, trustee, consultant or in any other relationship or capacity
provided, however, that nothing contained herein shall be deemed to
prohibit the Executive from acquiring solely as an investment up to two
(2) percent of the issue and outstanding shares of capital stock of any
public corporation engaged in any such competitive business. During the
Term and for a period equal to the period during which the Executive
receives payments pursuant to Section 4(c) hereof, the Executive and any
entity controlled by him or by which he is employed shall not solicit,
interfere with, induce any person who is or was an officer, interfere
with, hire, offer to hire or induce any person who is or was an officer,
employee, customer, supplier or agent of the Company or any Affiliate to
discontinue his or her relationship with the Company or such Affiliate or
to accept employment by any other entity or person.
(ii) Notwithstanding anything above to the contrary, the Company
acknowledges that the Executive is a member of Xxxxx Partners and that the
Executive may remain a member of Xxxxx Partners unless otherwise directed
by the Board to resign from Xxxxx Partners.
(b) The Executive agrees to keep secret and retain in the strictest
confidence all confidential matters which relate to the Company or any
Affiliate, including, without limitation, customer lists, trade secrets, pricing
policies and other business affairs of the Company and any Affiliate learned by
him from the Company or any Affiliate or otherwise heretofore or hereafter, and
not to disclose any such confidential matter to anyone outside the Company or
any Affiliate, whether during or after his period of service with the Company,
except in the course of performing his duties hereunder. Upon request by the
Company, the Executive agrees to deliver promptly to the Company upon
termination of his services for the Company, or at any time thereafter as the
Company may request, all Company memoranda, notes, records, reports, manuals,
drawings, designs, computer files in any media and other documents (and all
copies thereof) relating to the Company's or any Affiliate's business and all
property of the Company or any Affiliate associated therewith, which he may then
possess or have under his control.
(c) The Executive agrees that all processes, technologies and inventions,
including new contributions, improvements, formats, packages, programs, systems,
machines, compositions of matter manufactured, developments, applications and
discoveries which are related in any manner to the business (commercial or
experimental) of the Company or any of its Affiliates (collectively, "New
Developments"), whether patentable or not, conceived, developed, invented or
made by him or jointly with others during the period of his employment with the
Company and the Company shall be the sole owner of all the products and proceeds
of the Executive's services, including intellectual or literary property in any
form. The Executive shall further: promptly disclose such New Developments to
the Company; assign to the Company, without additional compensation, all patent
or other rights to such New Developments for the United States and foreign
countries; sign all papers necessary to carry out the foregoing; and give a
reasonable amount of testimony in support of his inventorship.
(d) If the Executive commits a material breach of any of the provisions of
this Section 5 or Section 4(f), the Company or any Affiliate shall have the
right and remedy to have the provisions of this Agreement specifically enforced
by any court of competent jurisdiction, it being acknowledged by the Executive
and agreed that any such breach will cause irreparable injury to the Company or
such Affiliate and that money damages will not provide an adequate remedy to the
Company or such Affiliate. Such rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available to the Company or any
Affiliate at law or in equity. The provisions of this Section 5 shall survive
the expiration or termination of this Agreement.
6. MISCELLANEOUS. (a) Neither of the parties hereto shall have the right
to assign this Agreement or any rights or obligations hereunder without the
prior written consent of the other party; provided, however, that this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
the Company upon any sale of all or substantially all of the Company's assets,
or upon any merger or consolidation of the Company with or into any other
corporation, all as though such successors and assigns of the Company and their
respective successors and assigns were the Company.
(b) The Agreement and the relationships of the parties in connection with
the subject matter of this Agreement shall be construed and enforced according
to the laws of the State of New York without giving effect to the conflict of
laws rules thereof.
(c) This Agreement contains the full and complete agreement of the parties
relating to the employment of the Executive hereunder and supersedes all prior
agreements, arrangements or understandings, whether written or oral, relating
thereto. This Agreement may not be amended, modified or supplemented, and no
provision or requirement hereof may be waived, except by written instrument
signed by the party to be charged. Notwithstanding the foregoing, in the event
the Executive is covered by the Executive Continuation Agreement between the
Company and the Executive of even date which provides benefits payable upon the
termination of the Executive's employment following a change in control of the
Company, the provisions of this Agreement which provide severance payments shall
not be applicable if the Executive becomes entitled to receive payments under
such Executive Continuation Agreement.
(d) If any provision of this Agreement is held to be invalid or
unenforceable by any judgment of a tribunal of competent jurisdiction, the
remainder of this Agreement shall not be affected by such judgment, and this
Agreement shall be carried out as nearly as possible according to its original
terms and intent.
(e) Any dispute or question arising from this Agreement or its
interpretation shall be settled exclusively by arbitration in New York, New York
in accordance with the commercial rules then in effect of the American
Arbitration Association. Judgment upon an award rendered by the arbitrator(s)
may be entered in any court of competent jurisdiction, including courts in the
state of New York. Any award so rendered shall be final and binding upon the
parties hereto. All costs and expenses of the arbitrator(s) shall be paid as
determined by such arbitrator(s), and all costs and expenses of experts,
witnesses and other persons retained by the parties shall be borne by them
respectively. In the event that injunctive relief shall become necessary under
this Agreement, either of the parties shall have the right to seek provisional
remedies prior to an ultimate resolution by arbitration.
(f) As used herein, the term "Affiliate" shall mean any corporation or
business entity controlling, controlled by or under common control with the
Company.
(g) Any notice required or permitted to be given under this Agreement
shall be sufficient if it is in writing, and if it is sent by registered mail to
his residence, in the case of the Executive, and to the Chairman of the Company
at its principal executive offices, in the case of the Company, or such other
person or address as either party shall designate in writing to the other.
Notice has been deemed to be given three days after mailing.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
Porta Systems Corp.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
/s/ Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx
