1
EXHIBIT 10.24
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and effective as of the 1st day of
July, 1996, by and between Elcom International, Inc., a Delaware corporation
with its principal place of business at Xxx Xxxxxx Xxx, Xxxxxxx, Xxxxxxxxxxxxx
00000 ("Elcom" or the "Company"), and Xxxxxxxx X. Xxxxxxx currently residing at
00 Xxxxxx Xxxxxx, Xxxxx, Xxxxxxxxxxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Executive wishes to be employed by the Company as
its Chief Financial Officer and a Corporate Executive Vice President; and
WHEREAS, the Company desires to employ Executive consistent
with the terms of this Agreement, and to ensure, to the extent possible, that
certain knowledge gained by the Executive in association with his employment
with the Company is not used to the detriment of the Company; and
WHEREAS, the Executive and the Company (the "Parties") desire
to enter into an agreement expressly indicating the terms and conditions of
their relationship.
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, the Company and the Executive agree as follows:
1. Duties. The Company hereby employs Executive to be Chief
Financial Officer and a Corporate Executive Vice President of the Company.
Executive shall report directly to Xxxxxx X. Xxxxxxx, the Chairman and Chief
Executive Officer (the "Chairman") of the Company or other executive as
designated by the Board of Directors. During the course of his employment,
Executive shall have the responsibility to perform such duties, consistent with
such position, as generally described below and as may be assigned to him by the
Chairman of Elcom and/or the Board of Directors of the Company. During the
Employment Period, Executive agrees to devote full business time and best
efforts to the business activities and welfare of the Company.
The Chairman reserves the right to reassign the Executive's
duties or reporting structure as
2
appropriate or necessary and it is anticipated that Executive may be assigned
additional responsibilities by the Chairman and/or by the Board of Directors.
2. Term. This Agreement's term (the "Term") shall begin on the
date hereof and continue for twenty-four months and terminate on June 30, 1998
but will automatically renew at the end of each term for a one-year period
unless the Executive or the Company notifies the other party six months prior to
the end of each employment year (ending June 30th).
3. Salary. During the course of employment for the Term
specified in Section 2, unless sooner terminated hereunder (the "Employment
Period"), the Company will pay Executive for his performance of the duties
specified herein an annual base salary of at least $142,000 per year payable in
the manner that the Company normally pays its employees.
4. Benefits.
A. Vacations/Time Off. During the course of
employment, Executive shall be entitled to accrue five (5) weeks of time off for
vacations per year, to be taken at a time or times acceptable to the Chairman
and otherwise consistent with the terms and conditions of this Agreement.
B. Additional Compensation. Once made available to
Executive, the Executive shall be eligible to participate in a bonus program,
designed by the Chairman after consultations with Executive, whereby Executive
shall have the opportunity to earn a bonus of up to 30% of his then-current
annual base salary based on goals and objectives assigned by the Chairman, with
a (preliminary) bi-annual advance of such bonus to be paid to Executive based on
progress towards achievement of such goals as determined by the Chairman and/or
the Compensation Committee. This future bonus program shall then be superseded
when the Company implements its Executive Profit Performance Bonus Plan in which
Executive shall be eligible to participate and in which Executive shall have the
opportunity to achieve bonus levels no less than those in effect at such time;
provided that no guarantee of the achievement of such bonus opportunities shall
be inferred. The Executive shall also be eligible to participate in incentive,
profit-sharing, annual cash bonus, deferred compensation, incentive stock
options, supplemental retirement and any other similar plans, if any, maintained
by the Company for the benefit of its executives generally, in accordance with
the eligibility and other terms thereof and at the discretion of the Board of
Directors and/or the Compensation Committee thereof.
2
3
C. Other Executive Fringe Benefits. The Executive
shall be included to the extent eligible thereunder in Company benefit plans
providing group life insurance, hospitalization, medical, pension, financial
services and any and all other similar or comparable benefits at least to the
extent they may be in effect for other executives of the Company generally from
time to time during the Employment Period.
D. Fringe Benefits. Nothing in this Agreement shall
adversely affect the rights of the Executive or his beneficiaries under the
present or any future retirement, profit-sharing, insurance, or other fringe
benefit or compensation plans or arrangements which the Company now has or may
adopt for its employees in which Executive is a participant, and no rights of
the Executive thereunder shall be forfeited by any action set forth in this
Agreement unless so provided in such plans or arrangements.
5. Termination of Employment.
A. Death.
If the Executive shall die during the term
of this Agreement, the duties of the Company and the Executive, one to the
other, under this Agreement shall terminate as of the date of the Executive's
death.
B. Disability.
If the Executive shall become "disabled" (as
herein defined) during the term of this Agreement, the duties of the Company and
the Executive, one to the other, under this Agreement shall terminate as of the
date the Executive is determined to be disabled, except that the provisions of
Sections 8 through 12 hereof shall survive any such termination. The term
"disabled" as used in this Agreement shall mean Executive's inability, due to a
mental or physical condition, to continue to provide services to the Company
substantially consistent with past practice for a period of at least ninety (90)
consecutive days, as evidenced by a written certification as to such condition
from a physician (which shall not be Executive's physician) mutually acceptable
to the Executive and the Company's Board of Directors, using reasonable good
faith judgment.
C. Continuation of Executive Benefits.
The death, disability or other termination of
employment of the Executive, whether or not voluntary shall not adversely affect
the Executive or his beneficiaries' rights to any then-vested benefits under any
life insurance, death benefit, pension, profit sharing, stock option, medical,
deferred compensation, supplemental executive
3
4
retirement plan or other employee benefit plan or arrangement except as may be
provided in such plan or arrangement, and if termination of employment occurs by
reason of Executive's death, such continued benefits shall be paid to his estate
or designated beneficiaries.
D. Resignation.
If the Executive voluntarily leaves the
employ of the Company during the term of this Agreement, the duties of the
Company and the Executive, one to the other, under this Agreement shall
terminate as of the date of the Executive's termination of employment, except as
provided in Section 5.F and except that the provisions of Sections 8 through 12
hereof shall survive any such termination.
E. Termination by Company.
The Company may terminate the Executive's
employment at any time "For Cause" (as hereinafter defined), in which case the
duties of the Company and the Executive, one to the other, under this Agreement
shall terminate as of the date of the Executive's termination of employment,
except that the provisions of Sections 8 through 12 hereof shall survive any
such termination.
As used herein, the words "For Cause" shall
be deemed to mean the following: (i) the Executive's alleged involvement in any
felony, or crime, via indictment or written complaint, or any alleged crime in
connection with his employment by the Company (including theft of Company
assets) which may cause the Company or any affiliated company a detriment as
determined by the Chairman or the Board of Directors; or (ii) the Executive's
refusal to submit to a medical examination within forty-five (45) days of being
directed to do so in writing by the Board of Directors to determine whether the
Executive is disabled under Section 5.B hereof; or (iii) gross insubordination
or the Executive's failure to take actions permitted by law and necessary to
preserve the welfare of the Company, implement strategies or policies of the
Company which the Chairman has communicated to him and which are consistent with
his position and duties, following 24 hours written warning of such failure; or
(iv) any condition which either resulted from the Executive's drunkenness or use
of any drug or narcotic, or resulted from any injury which drunkenness or drug
or narcotic use or self inflicted injury caused, and which has adversely
affected the Executive's performance; or (v) acting in breach or contravention
of the confidentiality, non-competition, non-disclosure or non-solicitation
covenants set forth in Sections 9, 10, and 11 hereof.
4
5
F. Notice of Termination. Any termination of the
Executive's employment by the Company or by the Executive under Sections 5.D or
E above shall be communicated by written Notice of Termination to the other
party hereto, which shall set forth the effective date and time of such
termination (not earlier than the date of mailing, or delivery by other means,
of the Notice of Termination).
6. Compensation Upon Involuntary Termination Other Than For
Cause. If the Executive's employment with the Company shall be terminated during
the Employment Period by the Company other than For Cause or Death or Disability
(as defined in Section 5.B); except in a Company downsizing which involves over
10% of the Company's U.S.-based employees within a 60 day period (if such
downsizing is associated with a transaction contemplated under Section 13, then
the terms of Section 13 shall control), then the Executive shall be entitled to
the severance payments provided below:
i. the Company shall pay the Executive the
amount described herein, determined as of
the date of his termination of employment,
on otherwise normal payment dates through
the date that is twelve months after the
date of termination; and
ii. twelve months base salary in a lump sum; and
iii. any accrued performance bonus (which had, at
that time, already been granted) through the
date of termination of Executive's
employment.
Not withstanding the foregoing, if the Executive's employment
with the Company is terminated other than for cause by Xxxxxx X. Xxxxxxx, the
current Chairman of the Company, then the executive's severance pay shall be
limited to the payments under the subparagraphs (i) and (iii) above.
Except as expressly provided in this Agreement, nothing in
this Agreement shall be construed as amending any compensation or fringe benefit
plan or arrangement of the Company. Except as expressly provided in this
Agreement, all rights of the Executive under any such plans or arrangements upon
his termination of employment must be determined under the terms of such plans
or arrangements at the time of the Executive's termination of employment.
Executive expressly agrees not to discuss, except with his official advisors,
any information or aspects of his employment regarding the Company or his
termination circumstances unless under compulsion from a court of competent
jurisdiction and further, upon Executive's violation of this provision, in
addition to the Company immediately canceling any and all remaining severance
payments or other obligation to Executive, Executive agrees that injunctive
relief may be granted.
5
6
7. Expenses. The Company shall reimburse Executive for
reasonable business expenses incurred by him on behalf of the Company and
documented according to the Company's policies in the performance of his duties
as specified herein. Executive shall furnish the Company with the documentation
in connection with such expenses required by the Internal Revenue Code and the
regulations promulgated thereunder.
8. Proprietary Rights. It shall be part of the normal duties
of the Executive at all times to consider in what manner and by what new methods
or devices the products, services, processes, equipment or systems of the
Company might be improved and promptly to give to the Board full details of any
invention, discovery, design or improvement which he may from time to time make
or discover in the course of his duties and to further the interests of the
Company's undertaking with regard thereto. The Executive hereby agrees that the
sole ownership of any invention, discovery, design or improvement aforesaid and
all proprietary rights therein discovered or made by him (whether alone or
jointly with others) at any time during his engagement hereunder, shall belong
free of charge and exclusively to the Company or as it may direct, and he agrees
to execute and deliver all documentation related thereto deemed necessary or
helpful by the Company.
9. Noncompetition. Executive agrees that during the period
(the "Noncompetition Period") commencing on the end of the Employment Period and
ending on the date that is 24 months after the later of the date of his/her
cessation of employment with the Company, or the last date on which he is paid
by the Company, (which for purposes of Sections 8, 9, 10 and 11 of this
Agreement shall mean the Company and any affiliates controlling, controlled by
or under common control with Elcom, including their predecessors), he will not,
without prior written consent of the Chairman of the Company, either directly or
indirectly, in any capacity whatsoever, (a) compete with the Company by
soliciting the sale of personal computer products (such as computers, printers,
monitors, software, etc.) or services to any customer (including affiliates of
such customer) of the Company by whatever method or (b) operate, control,
advise, be employed and/or engaged by, perform any consulting services for,
invest in (other than the purchase of no more than 5 percent of the publicly
traded securities of a company whose securities are traded on a national stock
exchange) or otherwise become associated with, any person, company or other
entity who or which, at any time during the Noncompetition Period, competes with
the Company via the use of an electronic ordering methodology as defined herein.
As used in clause (b) above, "compete" is defined as the
development, marketing, distribution or sale
6
7
of desktop, laptop, notebook or other commonly called "personal computer"
equipment, software, services, peripherals or accessories by any company or
entity or subdivision thereof in any geographical area in which the Company
maintains offices, sales agents, or otherwise conducts business. The Executive
further expressly represents and understands that if Executive's employment is
terminated, the Noncompetition Agreement will prohibit the Executive from future
employment with companies that compete with the Company, as defined in this
Noncompetition Agreement, and as such, might theoretically constrain some of the
Executive's overall possibilities for future employment. By Executive's
signature to this Noncompetition Agreement, Executive expressly represents that
his training, education and background are such that his ability to earn a
living shall not be impaired by the restrictions in this Noncompetition
Agreement. The definition of compete can be modified by mutually agreed
addendum, if and when the Company enters additional types or lines of
businesses.
10. Nondisclosure. Executive agrees during the period (the
"Nondisclosure Period") commencing on the end of the Employment Period and
ending on the date that is ten years after the later of the date of his
cessation of employment with the Company, or the date on which he is last paid
by the Company, whether or not under this Agreement, at all times to hold as
secret and confidential (unless disclosure is required pursuant to court order,
subpoena, in a governmental proceeding, arbitration, or pursuant to other
requirement of law) any and all knowledge, technical information, business
information, developments, trade secrets, know-how and confidences of the
Company or its business, including, without limitation, (a) any information or
business secrets relating to the products, customers, strategies, business,
conduct or operations of the Company, its subsidiaries or any of their
respective clients, customers, consultants, providers, licensors or licensees
(collectively, "Company Affiliates"); (b) any information regarding any current
or prior employees of the Company or any of its affiliates (except where a job
reference has been requested by an ex-employee in writing and the employee asked
to give such reference consents); (c) the existence or betterment of, or
possible new uses or applications for, any of the Company's products or services
or those of any Company Affiliates; (d) any of the Company's customer lists,
pricing and purchasing information or policies of the Company or any Company
Affiliates; and (e) any methods, ways of business etc., used in the development,
use, sale or marketing of the Company's products or services or those of any
Company Affiliates, (collectively, "Confidential Information") of which he has
acquired knowledge of during or after his employment with the Company, to the
extent that such matters (i) have not previously been officially made public or
are not thereafter made public, or (ii) do not
7
8
otherwise become available to Executive, in either case, via a source not bound
by any confidentiality obligations to the Company or Company Affiliates. The
phrase "made public" as used in this Agreement shall apply to matters within the
domain of the general public or the Company's industry. During the Nondisclosure
Period, Executive agrees not to use, directly or indirectly, such knowledge for
his own benefit or for the benefit of others and agrees not to disclose any of
such Confidential Information without prior written consent of the Company. At
the cessation of employment with the Company, the Executive agrees to promptly
return all Company property to the Company as well as any and all Confidential
Information which relates in any way to any of the foregoing items covered in
this paragraph and to destroy any transcripts or copies the Executive may have
of such Confidential Information unless an alternative method of disposition is
approved by the Company.
11. Nonsolicitation/Noninterference. Executive agrees that
during the two (2) year period (the "Nonsolicitation Period") commencing on the
end of the Employment Period and ending on the date that is two (2) years after
the later of the date of his cessation of employment with the Company, or the
last date on which he is paid by the Company, he will not at any time, without
prior written consent of the Company, discuss employment opportunities with an
employee, directly or indirectly solicit, induce, or attempt to solicit or
induce any employee, former employee (as herein defined), agent, consultant, or
other representative or associate of the Company for the purpose of providing
employment opportunities with any entity or to terminate his/her relationship
with the Company. Executive further covenants and agrees that, during the
Nonsolicitation Period, he or she will not, without the prior written consent of
the Company, directly or indirectly, induce or attempt to induce any actual or
prospective licensors, licensees, customers or suppliers of the Company to
terminate, alter or change its relationship with the Company or otherwise
interfere with any relationship between the Company and any of its actual or
prospective licensors, licensees, suppliers or customers or their employees or
former employees. A "former employee" shall mean any person who was employed by
the Company at any time during the one (1) year period prior to Executive's
cessation of employment with the Company.
12. Severability. In the event that Sections 8, 9, 10 and 11
hereof shall be found by a court of competent jurisdiction to be invalid or
unenforceable as written as a matter of law, the parties hereto agree that such
court(s) may exercise its discretion in reforming such provision(s) to the end
that Executive shall be subject to intellectual property ownership,
noncompetition, nondisclosure and nonsolicitation/noninterference covenants that
are
8
9
reasonable under the circumstances and enforceable by the Company.
13. Merger, Reconstruction or Acquisition. In the event that
the Company shall merge with another company (that is not immediately prior
thereto, a Company affiliate) and shall not be the surviving corporation, the
Executive shall be entitled to, and have the option to accept in writing, a
position with the acquiring or surviving company on terms not less favorable to
Executive in all material respects than the terms of this Agreement and which
shall be set forth in a written agreement between the acquiring company and
Executive prior to the consummation of such transaction. If substantially all
the assets of the Company are sold or otherwise transferred to another
unaffiliated corporation or party, it shall be a condition to such sale or
transfer that the transferee agrees to expressly assume the obligations
hereunder such that the provisions of this Agreement shall be binding upon the
entity to which such assets shall be sold or transferred and this provision also
shall apply in the event of any subsequent sale or transfer; provided, however,
that even in such instance, Executive shall have the option to elect not to
accept the Acquiror's employment arrangements (or this agreement), and instead
may elect to receive the benefits hereinafter described. If the acquiror or
surviving corporation does not agree with the Executive in writing to employ
Executive under materially the same terms of this Agreement, or if the Executive
elects not to accept an offer by the acquiror or surviving entity, for any
reason, then, upon consummation of any such previously-described transaction,
the Company, or the acquiring company or surviving corporation shall be
obligated to pay two (2) year's base salary in a lump sum, and all of
Executive's then outstanding stock options shall become fully vested and remain
exercisable for a period of 60 days thereafter, notwithstanding any provision to
the contrary in any stock option agreement or plan. Upon any such payment, the
duties of the Company and the Executive, one to the other, under this Agreement
shall terminate, except that the provisions of sections eight through twelve
hereof shall survive.
14. Acknowledgment. Executive specifically acknowledges that
the covenants set forth herein restricting competition, disclosure and
solicitation/interference are reasonable, appropriate and necessary as to
duration, scope and geographic area in view of the nature of the relationship
between Executive and the Company and the investment by the Company of
significant time and resources in the training, development and employment of
Executive. Executive warrants and represents that in the event that any of the
restrictions set forth in these covenants become operative, he will be able to
engage in other activities for the purpose of earning a livelihood, and shall
not be impaired by these restrictions.
9
10
Executive further acknowledges that the remedy at law for any
breach of these covenants, including monetary damages to which the Company may
be entitled, will be inadequate and that the Company, its successors and/or
assigns, shall be entitled to injunctive relief against any breach without bond.
Such injunctive relief shall not be exclusive, but shall be in addition to any
other rights or remedies which the Company may have for any such breach
including immediate cessation of any payments due Executive under this
Agreement.
Executive acknowledges and agrees that the references in the
foregoing Sections 8, 9, 10 and 11 to the "Company" are intended to be
applicable to, and for the benefit of, any affiliated entity controlling,
controlled by or under common control with the Company and any predecessors
thereof, and such term for all purposes thereof shall include any such entities.
15. Governing Law. This Agreement shall be governed and
performed in accordance with, and only to the extent permitted by, the laws of
the Commonwealth of Massachusetts applicable to contracts made and to be
performed entirely within such Commonwealth of Massachusetts.
16. Assignment. This Agreement shall inure to the benefit of,
and shall be binding upon, the Company, its successors and assigns subject to
the conditions cited in Sections 5.D and 13 giving rise to the Executive's right
to terminate this Agreement. Neither the Company nor Executive shall assign this
Agreement without the prior written consent of the other party hereto; except as
expressly provided in Section 13 hereof.
17. Entire Agreement; Amendments; Waivers. This Agreement
contains the entire agreement between the parties hereto with respect to the
subject matter hereof and replaces or supersedes any previous agreement on such
subject matter. It may not be changed orally, but only by agreement, in writing,
signed by each of the parties hereto. The terms or covenants of this Agreement
may be waived only be a written instrument specifically referring to this
Agreement, executed by the party waiving compliance. The failure of the Company
at any time, or from time to time, to require performance of any of Executive's
obligations under this Agreement shall in no manner affect the Company's right
to enforce any provisions of this Agreement at a subsequent time; and the waiver
by the Company of any right arising out of any breach shall not be construed as
a waiver of any right arising out of any subsequent breach.
18. Headings. The headings in this Agreement are intended
solely for convenience of reference and shall be given no effect in the
construction or interpretation of this Agreement.
10
11
19. Counterparts. This Agreement may be executed in multiple
counterparts each of which shall be deemed an original but all of which together
shall constitute one and the same document.
IN WITNESS WHEREOF, the parties hereto have executed
this Employment Agreement as of the date first above written.
ELCOM INTERNATIONAL, INC.
"Company"
______________________________
Xxxxxx X. Xxxxxxx
Chairman and CEO
"Executive"
______________________________
Xxxxxxxx X. Xxxxxxx
11
