EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of the [__] day
of August, 2000 by and between NCT Midcore, Inc., a Delaware corporation having
its principal place of business at 000 Xxxxxxx Xxxxxxxx, Xxxxxxxxxx, Xxxxxxxxxxx
00000 (the "Company") and Xxxxx Xxxxxx, an individual residing at 000 Xxxxxxxx
Xxxx, Xxxxxxx, Xxxxxxxxxxx 00000 ("Employee").
W I T N E S S E T H:
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WHEREAS, Employee is a founder and principal shareholder of Midcore
Software Incorporated ("Midcore"); and
WHEREAS, pursuant to a certain Agreement and Plan of Merger (the "Merger
Agreement") of even date herewith by and among NCT Group, Inc. ("NCT"), the
Company, Midcore, Employee and certain other individuals named therein, Midcore
is merging with and into the Company; and
WHEREAS, the Company desires to offer employment to Employee, and Employee
agrees to accept such offer of employment, under the terms and conditions
contained in this Agreement; and
WHEREAS, as a condition to Midcore entering into the Merger Agreement and
the consummation of the transactions contemplated thereby, Employee and Midcore
have required the Company to enter into this Agreement with Employee.
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT
The Company hereby employs Employee for the purpose of serving as its
President and Employee hereby accepts such employment upon the terms and
conditions hereinafter set forth.
2. DUTIES
Employee shall have, perform and discharge well and faithfully the duties
and powers reasonably appropriate to a President. During the period of his
employment relationship with the Company hereunder, Employee shall devote all
reasonable business efforts to the interests of the Company and shall not engage
in any action or activities detrimental to the best interests of the Company.
3. TERM OF EMPLOYMENT
The initial term of this Agreement shall be for a period of three (3) years
commencing on the date of execution of this Agreement and ending on the third
anniversary of such date (the "Initial Term"); provided, however, that this
Agreement shall be automatically renewed for additional periods of one (1) year
after such date (each, a "Renewal Term") unless and until either Employee or the
Company notifies the other that he or it, as the case may be, elects to
terminate the Agreement as of the end of the Initial Term or the end of a
Renewal Term by providing written notice to the other not less than sixty (60)
days before the end of the Initial Term or the Renewal Term, as the case may be.
4. COMPENSATION AND BENEFITS
(a) Base Salary. Employee shall be paid an annual salary of not less than
$100,000 payable in accordance with the Company's payroll policy as in
effect from time to time ("Base Salary"). Such Base Salary shall be subject
to cost of living increases on an annual basis and shall be subject to
merit increases from time to time as may be determined in the discretion of
the Board of Directors of NCT. In the event the Company relocates its
business office or requires Employee to relocate his residence more than
thirty (30) driving miles from Middlebury, Connecticut or assigns Employee
duties reasonably requiring such a relocation, such Base Salary shall also
be increased to reflect market competitive rates.
(b) Bonus. In addition to receiving a Base Salary, Employee shall be eligible
to receive an annual bonus of at least $50,000 ("Bonus") subject to the
achievement of certain Bonus criteria. The criteria for the Bonus shall be
mutually agreed upon by Employee and the Company each year with the
understanding that the Bonus criteria shall be established such that 80% of
the Bonus may be achievable and 20% of the Bonus may be achieved with
greater difficulty.
(c) Stock Options. At the first meeting of the Board of Directors of NCT
following the execution of this Agreement, Employee shall be awarded
incentive stock options to purchase shares of common stock, $0.01 par value
per share, of NCT ("NCT Shares"). Employee shall receive additional
incentive stock options at the discretion of the Board of Directors of NCT.
All options shall (i) be evidenced by an option agreement, (ii) be granted
pursuant to, and subject to the terms and provisions of, NCT's stock option
plan then in effect and (iii) have a term of ten (10) years. The exercise
price for all such options shall be the fair market value of NCT Shares on
the respective date of grant. All such options shall vest annually over a
four (4) year period with twenty percent (20%) deemed vested on the date of
grant, and an additional twenty percent (20%) to vest, subject to continued
employment by Employee with the Company or an affiliate thereof, on each of
the four (4) subsequent anniversaries of the date hereof; provided,
however, that all unvested options shall vest immediately if more than
fifty percent (50%) of the Company's, NCT's and its affiliates' assets or
business or more than fifty percent (50%) of the Company's or NCT's stock
are purchased or acquired (including by virtue of a merger, consolidation,
reorganization or similar transaction) by any person or entity in a single
transaction or series of related transactions.
(d) Additional Benefits. Employee shall be entitled to participate in any and
all employee benefit plans or programs of the Company and NCT from time to
time in effect and which are made available to senior executives (the
"Plans"), subject to the terms of the applicable Plan documents. For
purposes of determining Employee's eligibility to participate in and the
amount of benefits for which Employee is eligible with respect to any such
Plans, Employee shall be credited for his six (6) years of service as a
full-time employee of Midcore.
(e) Reimbursement of Expenses. Employee shall be entitled to reimbursement of
all reasonable expenses incurred by him in connection with the performance
of his duties hereunder, subject to the presenting of appropriate
supporting materials in accordance with the Company's policies regarding
such matters as in effect form time to time.
(f) Vacation; Sick Leave; Holidays. Employee shall be entitled to vacation with
pay in accordance with the policies of the Company for its senior executive
officers, such vacation to be taken at such times and intervals as shall be
mutually agreed by Employee and the Company. Employee shall also be
entitled to paid legal holidays and paid sick leave in accordance with the
policies of the Company for its senior executive officers.
5. TERMINATION OF EMPLOYMENT
(a) Termination Events. Notwithstanding any other provision of this Agreement,
the employment of Employee hereunder shall terminate under the following
circumstances:
(1) Employee's employment hereunder shall immediately and automatically
terminate upon Employee's death, effective as of the date of Employee's
death.
(2) The Company may terminate Employee's employment hereunder for Cause. For
purposes of this Agreement, "Cause" for termination shall mean only the
following:
(A) the willful failure by Employee to substantially perform his duties
hereunder (other than such failure as results from Employee's illness or
physical or mental infirmity), but only if such failure continues and is
not remedied by Employee within thirty (30) days of receipt by Employee of
written demand (a "Written Demand") by NCT's Board of Directors or C.E.O.,
which Written Demand specifically identifies the manner in which the
Company believes that Employee has failed to discharge said duties; or
(B) the willful failure by Employee to either:
(i) willfully devote substantially all of his full professional/business time
and attention to his duties hereunder; or
(ii) immediately cease engaging in gross misconduct materially injurious to the
Company and/or its affiliates;
but only, other than with respect to a failure under the foregoing clause
(ii), if such failure continues and is not remedied by Employee within
thirty (30) days of receipt by Employee of a Written Demand by NCT's Board
of Directors or C.E.O., which Written Demand specifically identifies the
manner in which the Company believes that Employee has failed to discharge
said duties;
(C) if Employee is adjudicated or pleads guilty to a crime involving moral
turpitude or the possession, use or sale of illegal or controlled
substances or other material that has or is likely to have a material
detrimental effect on the business or reputation of the Company; or
(D) if Employee engages in misappropriation, theft or conversion or in the
event of Employee's chronic drunkenness or drug addiction; or
(E) if Employee breaches or otherwise violates any of the provisions of Section
6 hereof; or
(F) if Employee willfully causes or directs the Company to commit a violation
of a law, rule or regulation where such violation could have a material
adverse effect on the Company, its financial condition, reputation or
prospects.
For purposes of this Section 5(a)(2), no act or failure to act on
Employee's part shall be considered "willful" unless done, or omitted to be
done, by Employee in bad faith or without Employee's reasonable belief that
his action or omission was in the best interests of the Company.
A termination for Cause shall be effective (i) if no curing period is
applicable, as of the date of Employee's receipt of written notice of the
Company's election to terminate Employee for Cause, which notice specifies
the particular act(s), or failure(s) to act, that constitute(s) the basis
for the Company's election to so terminate Employee, or (ii) if a curing
period is applicable and Employee has failed to cure within such curing
period, upon expiration of such curing period following Employee's receipt
of a Written Demand of NCT's Board of Directors or C.E.O.
(3) The Company may terminate Employee's employment hereunder by reason of
Employee's Disability. For purposes of this Agreement, the term
"Disability" shall mean the inability of Employee, due to illness or
physical or mental infirmity, to perform his duties under this Agreement to
the extent performed prior to such disability, for one or more periods
totaling 180 days during any twelve-month period and such illness or
physical or mental infirmity is expected to continue for the foreseeable
future. For purposes of this Agreement, "Disability" shall be determined in
the reasonable discretion of NCT's Board of Directors. A termination by
reason of Employee's Disability shall be effective thirty (30) days
following the delivery of written notice of the Company to Employee of the
Company's intention to terminate Employee's employment due to Employee's
Disability.
(4) Employee may terminate Employee's employment hereunder for "good reason" in
the event that:
(A) the Company materially restricts or curtails Employee's duties or
repeatedly assigns duties to Employee that are not consistent with the
duties performed by other senior executives of the Company; or
(B) the Company relocates its business office more than fifty (50) driving
miles from Middlebury, Connecticut or requires Employee to relocate his
residence outside of Connecticut or more than fifty (50) driving miles from
Middlebury, Connecticut or assigns Employee duties reasonably requiring
such a relocation; or
(C) the Company otherwise materially breaches this Agreement.
A termination by Employee for good reason shall be effective thirty (30)
days following delivery of written notice by Employee to the Company of
Employee's election to terminate Employee's employment hereunder for good
reason, together with a statement setting forth in reasonable detail the
basis for such election, unless prior to the expiration of such thirty-day
period, the Company revokes the decision or direction which is the basis
for such election.
(b) Compensation Upon Termination.
(1) If Employee's employment hereunder is terminated by the Company for Cause
or by reason of Employee's Disability, or is terminated due to Employee's
death, then the Company shall be obligated to (A) pay to Employee (or
Employee's estate, as the case may be) at the rate of Employee's then
current Base Salary, any accrued but unpaid Base Salary through the
effective date of Employee's termination, (B) pay to Employee (or
Employee's estate) at the rate of Employee's then current Base Salary, any
accrued but unpaid paid vacation days through the effective date of
Employee's termination, and (C) subject to the provisions of Section 4(e),
reimburse Employee (or Employee's estate) for any unreimbursed expenses
incurred by Employee prior to the effective date of termination.
(2) If Employee's employment hereunder is terminated by Employee for good
reason, the Company shall be obligated to (A) pay to Employee, in a single
lump sum, within 60 days of the effective date of such termination,
severance compensation ("Severance Compensation") in an amount equal to one
(1) year of Employee's Base Salary at the then current rate (B) pay to
Employee, at the rate of Employee's then current Base Salary, any accrued
but unpaid paid vacation days through the effective date of Employee's
termination, and (C) subject to the provisions of Section 4(e), reimburse
Employee for any unreimbursed expenses incurred by Employee prior to the
effective date of termination. Notwithstanding the provisions of the
foregoing sentence, if Employee's employment hereunder is terminated by
Employee for good reason and the Company, within fifteen (15) days of the
date of such termination, waives in writing all of the provisions of the
non-competition covenant contained in Section 6(d), then the Company shall
be obligated to pay to Employee an amount of Severance Compensation equal
to six (6) months of Employee's Base Salary at the then current rate. The
Company acknowledges and agrees that Employee shall have no duty to seek
alternative employment in the event of a termination for good reason and
that no income, salary or other compensation earned by Employee following a
termination for good reason during the remainder of what would have been
the then current term of this Agreement shall reduce the amounts payable to
Employee under this Section 5(b)(2).
6. CONFIDENTIALITY; DEVELOPMENTS; NON-COMPETITION
(a) Acknowledgments. Employee acknowledges that during the course of Employee's
previous employment and/or association with Midcore as a founder, director,
executive, consultant, advisor and/or employee of Midcore, and any
predecessor thereto, Employee has had, and, during the course of Employee's
employment hereunder, Employee will have access to certain confidential
information, including, but not limited to, certain computer software,
algorithms, computer processing systems or techniques, business plans or
prospects, records, files, memoranda, reports, pricing information,
customer and supplier lists and the like, concerning either Midcore and its
business or the Company and its business, or disclosed to Midcore or the
Company by others under an obligation of Midcore or the Company to hold the
same confidential ("Confidential Information"); and Employee may have,
during the period of Employee's previous employment and/or association with
Midcore as a founder, director, executive, consultant, advisor and/or
employee of Midcore, made, developed, invented or conceived of, and may,
during the period of his employment hereunder, make, develop, invent or
conceive of software programs, inventions, discoveries, concepts, ideas,
techniques, information, know-how and improvements (whether or not
patentable or registrable under copyright or otherwise subject to similar
protections under other, similar, laws) which related to or which were
useful in, or which relate to or which are useful in the Company's
business, some or all of which may have constituted or may constitute
Confidential Information, or which have resulted or result from the use of
premises or personal property (whether tangible or intangible) owned,
leased or contracted for by Midcore or the Company (collectively,
"Developments").
(b) Confidentiality. Employee shall hold all Confidential Information as
property of the Company and hereby agrees to maintain Confidential
Information as confidential. At such time as Employee's employment by the
Company hereunder is terminated, Employee agrees to return to the Company,
at its request, all Confidential Information, including any material stored
on computer disks or tapes, in Employee's possession or control and to
destroy any computer entries or storage files relating thereto. Employee
hereby agrees that Employee will not, during the term of Employee's
employment with the Company or afterwards, use the Confidential Information
for Employee or for others (other than the Company), copy such information
or disclose it to any person or entity; provided, that after the
termination of Employee's employment with the Company, the foregoing
restrictions shall not apply to Confidential Information which, at the time
of its disclosure by Employee, is public knowledge through no action or
omission by Employee or on Employee's behalf and which has not been
disclosed to the public by any third party in violation of any obligation
to maintain its confidentiality.
(c) Developments Property of the Company. Employee hereby sells, assigns and
transfers to the Company (or to any person or entity designated by it) all
of his right, title and interest in and to any Developments. Employee shall
promptly disclose to the Company (or to any persons designated by it), in
such form as the Company reasonably requests, all information, details and
data pertaining to any Developments; and, whether during the term of
Employee's previous employment and/or association with Midcore as a
founder, director, executive, consultant, advisor and/or employee of
Midcore or during his employment hereunder or thereafter, execute and
deliver to the Company such formal transfers and assignments and such other
papers and documents as may be required of him to permit the Company (or
any person designated by it) to patent any patentable Developments, to
copyright any copyrightable Developments, or to otherwise perfect its
interest in such Developments.
(d) Non-Competition Covenant. During the term of Employee's employment with the
Company hereunder and, subject to due and punctual performance by the
Company of its payment obligations hereunder, for a period of one (1) year
after the termination of such employment, Employee shall not, other than on
behalf of the Company or its affiliates and except as a passive investor in
less than five percent (5%) of the securities of a publicly-held company,
directly or indirectly, own, manage, operate, control or participate in the
ownership, management, operation or control of, serve as an officer,
director, partner, employee, agent, consultant, advisor, developer or in
any similar capacity with, or have any financial interest in, or aid or
assist anyone else in, the conduct of, any business or business activity
related to the design, development or sale of internet gateway computer
software products competitive with the Company. Nothing contained in the
foregoing sentence is intended to, or shall limit Employee from becoming
associated with or employed by, during the one-year period following
termination of Employee's employment hereunder, any person or entity
engaged in a business competitive with the business of the Company to the
extent that Employee's responsibilities as an employee of such person or
entity are related only to the lines of business of such person or entity
which, standing alone, would not constitute a business competitive with the
business of the Company.
(e) Remedies. Employee recognizes and agrees that the Company will suffer
irreparable harm as a result of a breach by Employee of the provisions of
this Section 6 for which money damages would be inadequate. Accordingly, in
the event of any actual or threatened breach by Employee of any such
provisions, the Company shall, in addition to any other legal remedies
permitted by applicable law, be entitled to equitable remedies, including,
without limitation, specific performance, a temporary restraining order or
a permanent injunction, in any court of competent jurisdiction to prevent
or otherwise restrain a breach of such provisions without the necessity of
proving damages and to recover all costs and expenses, including, without
limitation, reasonable attorneys' fees, incurred in enforcing such
provisions. Such relief shall be in addition to and not in substitution for
any other remedies available to the Company hereunder.
7. MISCELLANEOUS
(a) Notice. Any notice, request, instruction or other communication to be given
hereunder by any party to another shall be given by hand delivery,
telecopier (receipt confirmed), certified or registered mail (return
receipt requested) or by overnight express service addressed to the
respective party or parties at the addresses set forth on the first page
hereof or to such other address or addresses (or telecopier number(s)) as
either party may designate to the other by like notice as hereinabove set
forth. Any notice given hereunder shall be deemed given and received on the
date of hand delivery or telecopy transmission, or three (3) days after
deposit with the United States Postal Service, or one (1) day after
delivery to an overnight express service for next-day delivery, as the case
may be.
(b) Successors and Assigns. This Agreement inures to the benefit of the
successors and assigns of the Company and is binding upon Employee's heirs
and legal representatives. Employee shall not assign any of Employee's
rights or obligations hereunder without the prior written consent of the
Company, which consent shall not be unreasonably withheld.
(c) Severability of Agreement. The Company and Employee agree that the
provisions of this Agreement are severable and separate and that the
unenforceability of any specific provision shall not affect the validity of
any other provision hereof.
(d) Governing Law. This Agreement and the rights and obligations of the parties
hereunder shall be governed by and construed in accordance with the laws of
the State of Connecticut, as such laws are applied to contracts made and
performed wholly within such State.
(e) Consent to Jurisdiction. Employee and the Company each hereby irrevocably
consents to the in personam jurisdiction of the United States District
Court for the District of Connecticut and the Superior Court for the State
of Connecticut located at New Haven, Connecticut and consents to service of
process by certified mail at the address set forth adjacent to his or its
name on the first page hereof.
(f) Entire Agreement. This instrument contains the entire agreement of the
parties. It may be changed only by an agreement in writing signed by a
party against whom enforcement of any waiver, change modification,
extension or discharge is sought.
IN WITNESS WHEREOF, the parties have each executed this Agreement as of the
date first written above.
NCT Midcore, Inc.
By:
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Name:
Title:
Xxxxx Xxxxxx
