EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
this 1st day of December, 1996 by and between ASD GROUP, INC., a Delaware
corporation with its principal office at Xxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxx
Xxxx 00000 (the "Company"), and Xxxx X. Xxxxx, whose residence address is 000
Xxxxx Xxxxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Executive").
RECITALS
A. The Executive is currently Chairman of the Board and Chief Executive
Officer of the Company.
B. The Executive possesses intimate knowledge of the business and
affairs of the Company, its policies, methods and personnel.
C. The Board of Directors (the "Board") of the Company recognizes that
the Executive's contribution, as Chairman of the Board and Chief Executive
Officer of the Company, to the growth and success of the Company will be
substantial and desires to assure the Company of the Executive's present and
continued employment in an executive capacity and to compensate him therefor.
D. The Board has determined that this Agreement will reinforce and
encourage the Executive's continued attention and dedication to the Company.
E. The Executive is willing to make his services available to the
Company on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereby agree as follows:
1. EMPLOYMENT.
1.1 EMPLOYMENT AND TERM. The Company shall continue to employ the
Executive and the Executive shall continue to serve the Company, on the terms
and conditions set forth herein, for the period (the "Term") effective as of
December 1, 1996 (the "Commencement Date") and expiring on the third anniversary
of the Commencement Date, unless sooner terminated as hereinafter set forth;
provided, however, that commencing on the third anniversary of the Commencement
Date
and each anniversary of the Commencement Date and on each anniversary of
the Commencement Date thereafter, the Term of this Agreement shall automatically
be extended for one year unless 90 days prior to such anniversary date, the
Company shall have delivered to the Executive or the Executive shall have
delivered to the Company, written notice that the Term of the Executive's
employment hereunder will not be extended.
1.2 DUTIES OF THE EXECUTIVE. The Executive shall serve as Chairman
of the Board and Chief Executive Officer of the Company and shall perform the
duties of an executive commensurate with such position, shall diligently perform
all services as may be reasonably assigned to him by the Board and shall
exercise such power and authority as may from time to time be delegated to him
by the Board. The Executive shall devote such time as he deems necessary to the
business and affairs of the Company.
1.3 PLACE OF PERFORMANCE. In connection with his employment by the
Company, the Executive shall be based at the Company's principal executive
offices in Poughkeepsie, New York, except for required travel on the Company's
business to an extent substantially consistent with his present travel
obligations.
2. COMPENSATION.
2.1 BASE SALARY (THE "BASE SALARY"). During the Term, the Executive
shall receive a base salary at the annual rate of $160,000. The Base Salary
shall be payable in substantially equal installments consistent with the
Company's normal payroll schedule, subject to applicable withholding and other
taxes. Commencing on the first anniversary of the Commencement Date, and each
anniversary of the Commencement Date thereafter during the Term, the Base Salary
shall be increased, but shall not be decreased, by that percentage by which the
Consumer Price Index (All Items Less Shelter), Urban Wage Earners and Clerical
Workers, for the New York, New York area published by the United States
Government (the "Index") for the immediately preceding calendar year exceeds
such index for the next preceding calendar year. If publication of the Index is
discontinued, the parties hereto shall accept comparable statistics on the cost
of living for the Miami, Florida area as computed and published by an agency of
the United States government or, if no such agency computes and publishes such
statistics, by any regularly published national periodical that does compute and
publish such statistics.
2.2 ADDITIONAL CASH COMPENSATION. The Executive shall also be
entitled to receive such increments and base salary and performance or merit
bonuses (collectively, "Bonus") as shall be determined from time to time during
the term by the Board.
3. EXPENSE REIMBURSEMENT AND OTHER BENEFITS.
3.1 EXPENSE REIMBURSEMENT. During the Term, the Company, upon the
submission of supporting documentation by the Executive, and in accordance with
Company policies for its executives, shall reimburse the Executive for all
expenses actually paid or
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incurred by the Executive in the course of and pursuant to the business
of the Company, including expenses for travel and entertainment.
3.2 OTHER BENEFITS. The Company shall obtain or shall continue in
force comprehensive major medical and hospitalization insurance coverages,
including dental coverages, either group or individual, for the Executive and
his dependents, and shall obtain or shall continue in force disability and life
insurance for the Executive (collectively, the "Policies"), which Policies the
Company shall keep in effect at its sole expense throughout the Term. The
Policies to be provided by the Company shall be on terms as determined by the
Board; provided, however, that such Policies shall in no event provide benefits
to Executive which are less than the benefits to which he is currently entitled.
Within 30 days following any termination of this Agreement, at the Executive's
option, the Company shall assign to the executive all insurance policies of the
life of the Executive then owned by the Company in consideration of the payment
by the Executive of the cash surrender value, ff any, and the Executive's
agreement to assume the Company liability to pay any pre accruing thereon after
the date of such termination.
3.3 AUTOMOBILE ALLOWANCE. Throughout the Term of this Agreement, the
Company will pay Executive an automobile allowance in the amount of $500 per
month. Such automobile allowance shall be for no more than one automobile and
shall include all expenses related thereto, including, without limitation, lease
expenses, maintenance and insurance.
3.4 WORKING FACILITIES. The Company shall furnish the Executive with
an office, a secretary and such other facilities and services suitable to his
position and adequate for the performance of his duties hereunder.
3.5 VACATION. The Executive shall be entitled to reasonable
vacations during each year of the Term, the time and duration thereof to be
determined by mutual agreement between the Executive and the Company.
4. TERMINATION.
4.1 TERMINATION FOR CAUSE. Notwithstanding anything contained in
this Agreement to the contrary, this Agreement may be terminated by the Company
for Cause. As used in this Agreement "Cause" shall only mean (a) subject to the
following sentences, any action or omission of the Executive which constitutes a
willful and material breach of this Agreement (including his resignation without
consent of the Board, including a majority of independent directors), which is
not cured or as to which diligent attempts to cure have not commenced within 30
business days after receipt by the Executive of notice of same, (b) fraud,
embezzlement or misappropriation as against the Company, or (c) the conviction
(from which no appeal can be taken) of the Executive for any criminal act which
is a felony. Upon any determination by the Company's Board of Directors that
Cause exists under clause (a) of the preceding sentence, the Company shall cause
a special meeting of the Board to be called and held at a time mutually
convenient to the Board and the Executive, but in no event later than 10
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business days after the Executive's receipt of the notice contemplated by clause
(a). The Executive shall have the right to appear before such special meeting of
the Board with legal counsel of his choosing to refute any determination of
Cause specified in such notice, and any termination of the Executive's
employment by reason of such Cause determination shall not be effective until
the Executive is afforded such opportunity to appear. Any termination for Cause
pursuant to clause (b) or (c) of this Paragraph 4.1 shall be made in writing to
the Executive, which notice shall set forth in detail all acts or omissions upon
which the Company is relying for such termination. Upon any termination pursuant
to this Paragraph 4.1, the Company shall pay to the Executive any unpaid Base
Salary accrued through the effective date of termination specified in such
notice. In addition, the Company shall continue to pay any benefits, if any,
owed to the Executive under any plan provided for the Executive under Paragraph
3 hereof in accordance with the terms of such plan as in effect on the date of
termination of employment under this Paragraph 4.1 through age 65. Except as
provided above, the Company shall have no further liability hereunder (other
than for reimbursement for reasonable business expenses incurred prior to the
date of termination, subject, however to the provisions of Paragraph 3.1
hereof).
4.2 DISABILITY. Notwithstanding anything to the contrary contained
in this Agreement if, during the term hereof the Executive suffers a disability
(as defined below) the Company shall, subject to the provisions of Paragraph 4.3
hereof continue to pay the Executive the compensation provided in Paragraphs 2.1
and 2.2 hereof during the period of his disability; provided, however, that, in
the event the Executive is disabled for a period of more than 180 days in any 12
month period (the "Disability Period"), the Company may, at its election, by a
vote of 75% of the members of the Board of Directors within 90 days from the end
of the Disability Period, terminate this agreement. In the event of such
termination, payment of the Executive's Base Salary and fringe benefits (to the
extent permissible by applicable law) shall be continued for a period of 12
months after such termination. As used in this Agreement, the term "disability"
shall mean the complete inability of the Executive to perform his duties under
this Agreement as determined by an independent physician selected with the
approval of the Company and the Executive. Except as provided above, the Company
shall have no further liability hereunder (other than for reimbursement for
reasonable business expenses incurred prior to the date of termination subject,
however, to the provisions of Paragraph 3.1 hereof).
4.3 DEATH. In the event of the death of the Executive during the
Term of this Agreement, the Company shall pay to the Executive's legal
representative, any unpaid Base Salary accrued through the date of his death, as
well as a lump sum payment equal to (A) 12 months' Base Salary at the rate
prevailing on the date of the death of the Executive and (B) the share of Bonus
to which he would have been entitled pro rated based on the percentage of the
current fiscal year that had been completed on the date of his death. Except as
provided above, the Company shall have no further liability hereunder (other
than for reimbursement for reasonable business expenses incurred prior to the
date of the Executive's death, subject, however to the provisions of Paragraph
3.1 hereof).
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4.4 WITHOUT CAUSE. In the event the Company shall terminate this
Agreement other than for Cause, Disability or Death as provided hereof, payment
of the of the Executive's Base Salary and fringe benefits (to the extent
permissible by applicable law) shall be continued for a period of 12 months
after such termination.
5. MITIGATION. In no event shall the Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement.
6. CHANGE OF CONTROL.
(a) For the purposes of this Agreement, a "Change of Control" shall
be deemed to have taken place if: (i) any person, including a "group" as defined
in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, becomes
the owner or beneficial owner of Company securities, after the date of this
Agreement, having 15% or more of the combined voting power of the then
outstanding securities of the Company that may be cast for the election of
directors of the Company (other than as a result of an issuance of securities
initiated by the Company, or open market purchases approved by the Board, as
long as the majority of the Board approving the purchases is the majority at the
time the purchases are made), or (ii) the persons who were directors of the
Company before such transactions shall cease to constitute a majority of the
Board of the Company, or any successor to the Company, as the direct or indirect
result of or in connection with, any cash tender or exchange offer, merger or
other business combination, sale of assets or contested election, or any
combination of the foregoing transactions.
(b) The Company and the Executive hereby agree that, if the
Executive is affiliated with the Company on the date on which a change of
Control occurs (the "Change of Control Date") the Company (or, if the Executive
is affiliated with a subsidiary, the subsidiary) will continue to retain the
Executive and the Executive will remain affiliated with the Company (or
subsidiary), for the period commencing on the Change of Control Date and ending
on the second anniversary of such date, to exercise such authority and perform
such executive duties as are commensurate with the authority being exercised and
duties being performed by the Executive immediately prior to the Change of
Control Date. If after a Change of Control the Executive is requested, and, in
his sole and absolute discretion, consents to change his principal business
location, the Company will reimburse the Executive for his reasonable relocation
expenses, including without limitation, moving expenses, temporary living and
travel expenses for a reasonable time while arranging to move his residence to
the changed location, closing costs, if any, associated with the sale of his
existing residence and the purchase of a replacement residence at the changed
location, plus an additional amount representing a gross-up of any state or
federal taxes payable by the Executive as a result of any such reimbursements.
If the Executive shall not consent to change his business location, the
Executive may continue to provide the services required of him hereunder in
Poughkeepsie, New York and the Company shall continue to maintain an office for
the Executive at that location commensurate with the Company's office prior to
the Change of Control Date.
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(c) During the remaining term hereof after the change of Control
Date, the Company (or subsidiary) will (i) continue to pay the Executive a
salary at not less than the level applicable to the Executive on the Change of
Control Date, (ii) pay the Executive bonuses in amounts not less in amount than
those paid during the twelve month period preceding the Change of Control Date,
and (iii) continue employee benefit programs as to the Executive at levels in
effect n the Change of Control Date (but subject to such reductions as may be
required to maintain such plans in compliance with applicable federal law
regulating employee benefit programs).
(d) If during the remaining term hereof after the Change of Control
Date (i) the Executive's employment is terminated by the Company (or
subsidiary), or (ii) there shall have occurred a material reduction in the
Executive's compensation or employment related benefits, or a material change in
the Executive's status, working conditions, management responsibilities or
titles, and the Executive voluntarily terminates his relationship with the
Company within 60 days of any such occurrence, or the last in a series of
occurrences, then Executive shall be entitled to receive, subject to the
provisions of subparagraphs (e) and (f) below, a lump sum payment equal to 100%
of Executive's "base period income" as determined under (e) below. Such amount
will be paid to the Executive within 15 business days after his termination of
affiliation with the Company.
(e) The Executive's "base period income" shall be his base salary
and annual incentive bonuses paid or payable to him during or with respect to
the 12-month period preceding the date of his termination or affiliation. If the
Executive has not been affiliated for 12 months at the time of his termination
of affiliation, his "base period income" shall be his annualized base salary at
the rate then in effect and any annual incentive bonus paid to the Executive
prior to the date of his termination of affiliation or payable to the Executive
with respect to his period of affiliation.
(f) The amounts payable to the Executive under any other
compensation arrangement maintained by the Company (or a subsidiary) which
became payable after payment of the lump sum provided for in (d), upon or as a
result of the exercise by the Executive of rights which are contingent on a
Change of Control (and would be considered a "parachute payment" under Internal
Revenue Code Section 280G and regulations thereunder), shall be increased by an
additional amount representing a gross-up of any federal income tax liability
arising from an excess parachute payment or otherwise. If the Executive has not
been affiliated with the Company (or a subsidiary of the Company) during one or
more calendar years immediately preceding the Change of Control Date, this
paragraph (f) shall not apply.
(g) In the event of a proposed Change in Control, the Company will
allow the Executive to participate in all meetings and negotiations related
thereto.
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7. RESTRICTIVE COVENANTS.
7.1 NON-COMPETITION. During the Term and for a period of one year
following the termination (other than without Cause, as defined in Paragraph
4.1) of the Executive's employment by the Company, the Executive shall not,
directly or indirectly engage in or have any interest in, directly or
indirectly, any sole proprietorship, partnership, corporation, business or any
other person or entity (whether as an employee, officer, director, partner,
agent, security holder, creditor, consultant or otherwise) that, directly or
indirectly, engages primarily in the contract manufacturing industry in any and
all states in which the Company and/or any subsidiary conducts its business
during the Term or at the time the Executive's employment with the Company is
terminated (the "Territory"); provided, however, that the Executive may continue
to hold Company securities and/or acquire, solely as an investment, shares of
capital stock or other equity securities of any company which are traded on any
national securities exchange or are regularly quoted in the over-the-counter
market, so long as the Executive does not control acquire a controlling interest
in or become a member of a group which exercises direct or indirect control of,
more than five percent of any class of capital stock of such corporation.
7.2. NONDISCLOSURE. During the Term and following termination of the
Executive's employment with the Company, the Executive shall not divulge,
communicate, use to the detriment of the Company or for the benefit of any other
person or persons, or misuse in any way, any Confidential Information (as
hereinafter defined) pertaining to the business of the Company. Any Confidential
Information or data now or hereafter acquired by the Executive with respect to
the business of the Company (which shall include, but not be limited to,
information concerning the Company's financial condition, prospects, technology,
customers, suppliers, methods of doing business and marketing and promotion of
the Company's services) shall be deemed a valuable, special and unique asset of
the Company that is received by the Executive in confidence and as a fiduciary,
and the Executive shall remain a fiduciary to the Company with respect to all of
such information. For purposes of this Agreement "Confidential Information"
means information disclosed to the Executive or known by the Executive as a
consequence of or through his employment by the Company (including information
conceived, originated, discovered or developed by the Executive) prior to or
after the date hereof and not generally known, about the Company or its
business. Notwithstanding the foregoing, nothing herein shall be deemed to
restrict the Executive from disclosing Confidential Information to the extent
required by law.
7.3 NONSOLICITATION OF EMPLOYEES. During the Term and for a period
of one year following termination of the Executive's employment with the
Company, the Executive shall not directly or indirectly, for himself or for any
other person, firm, corporation, partnership, association or other entity,
attempt to employ or enter into any contractual arrangement with any employee or
former employee of the Company, unless such employee or former employee has not
been employed by the Company for a period in excess of six months.
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7.4 BOOKS AND RECORDS. All books, records, accounts and similar
repositories of Confidential Information of the Company, whether prepared by the
Executive or otherwise coming into the Executive's possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company on termination of this Agreement or on the Board's request at any time.
8. INJUNCTION. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Executive of any of the covenants contained in
Paragraph 7 of this Agreement will cause irreparable harm and damage to the
Company, the monetary amount of which may be virtually impossible to ascertain.
As a result, the Executive recognizes and hereby acknowledges that the Company
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and restraining any violation of any or all of the covenants contained
in Paragraph 9 of this Agreement by the Executive or any of his affiliates,
associates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other
remedies the Company may possess.
9. CONSOLIDATION, MERGER OR SALE OF ASSETS. Nothing in this Agreement
shall preclude the Company from consolidating or merging into or with, or
transferring all or substantially all of its assets to, another corporation
which assumes this Agreement, and all obligations of the Company hereunder, in
writing. Upon such consolidation, merger, or transfer of assets and assumption,
the term "the Company" as used herein, shall mean such other corporation and
this Agreement shall continue in full force and effect, subject to the
provisions of Paragraph 6 hereof.
10. BINDING EFFECT. Except as herein otherwise provided, this Agreement
shall inure to the benefit of and shall be binding upon the parties hereto,
their personal representatives, successors, heirs and assigns.
11. SEVERABILITY. Invalidity or unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provisions.
12. TERMINOLOGY. All personal pronouns used in this Agreement, whether
used in the masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural and vice versa. Titles of
Paragraphs are for convenience only, and neither limit nor amplify the
provisions of the Agreement itself.
13. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New York.
14. ENTIRE AGREEMENT. This Agreement contains the entire understanding
between the parties and may not be changed or modified except by an Agreement in
writing signed by all the parties.
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15. NOTICE. Any notice required or permitted to be delivered hereunder
shall be deemed to be delivered when deposited in the United States mail,
postage prepaid, registered or certified mail, return receipt requested,
addressed to the parties at the addresses first stated herein, or to such other
address as either party hereto shall from time to time designate to the other
party by notice in writing as provided herein.
16. OTHER INSTRUMENTS. The parties hereby covenant and agree that they
will execute such other and further instruments and documents as are or may
become necessary or convenient to effectuate and carry out the terms of this
Agreement.
17. COUNTERPARTS. This Agreement may be, executed in any number of
counterparts and each such counterpart shall for all purposes be deemed an
original.
18. ASSIGNABILITY. This Agreement shall not be assigned by either
party, except with the written consent of the other and except as provided in
Paragraph 9 hereof.
IN WITNESS WHEREOF, this Agreement has been duly signed by the parties
hereto on the day and year first above written.
ASD GROUP, INC.
By:/S/XXXXXX XXXXXXXX
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Name: Xxxxxx Xxxxxxxx
Title:Chief Financial Officer
/S/XXXX X. XXXXX
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Xxxx X. Xxxxx
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