Exhibit 10.5
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("AGREEMENT") is entered into as of January
1, 1999, the "EFFECTIVE DATE") by and between SmartDisk Corporation, a Delaware
corporation ("COMPANY") and Xxxxxxx X. Xxxxxxxxx ("EMPLOYEE").
1. EMPLOYMENT RELATIONSHIP.
1.1 COMMENCEMENT AND TERM OF EMPLOYMENT. The Company employs
Employee and Employee accepts employment by the Company as of the Effective Date
on the terms and conditions set forth in this Agreement. The term of employment
("TERM OF EMPLOYMENT") shall commence as of the Effective Date and shall
continue thereafter for a period of thirty-six (36) months unless sooner
terminated pursuant to Section 5.
1.2 DUTIES. During the Term of Employment, Employee shall have
the title and perform and faithfully discharge the duties and responsibilities
of President and Chief Executive Officer of the Company. Employee shall use his
best efforts to perform and discharge such duties and responsibilities in such
manner as the Company's Board of Directors may reasonably prescribe to Employee
from time to time. Employee shall also use his best efforts to observe all
policies, procedures and other requirements not inconsistent with this Agreement
that may be implemented or revised by the Company during the Term of Employment.
1.3 COMMITMENT OF EMPLOYEE. Employee shall devote
substantially all of his productive business time, attention, knowledge and
skill exclusively to the performance of his duties hereunder throughout the Term
of Employment and shall at all times discharge his duties faithfully,
industriously and to the best of his ability, experience and talents.
2. COMPENSATION.
2.1 SALARY. For all of Employee's services during the Term of
Employment, Employee shall be paid a salary of Two Hundred Seventy Five Thousand
Dollars ($275,000.00) per year. Employee shall be eligible for merit increases
as determined by the Board of Directors after the first anniversary of the
Effective Date of this Agreement. Payment shall be made in periodic installments
in accordance with Company's payroll policies instituted from time to time. Upon
termination of this Agreement pursuant to Section 5, the Company shall have no
obligation to pay salary or other benefits to Employee except as may be provided
in Section 5.
2.2 BONUS. Employee shall be entitled to an annual bonus
pursuant to Company's incentive plan set forth in EXHIBIT A (the "INCENTIVE
PLAN") attached hereto, or as the same may be amended by the Compensation
Committee of the Board of Directors. Upon attainment of one hundred percent
(100%) of the objective set forth in the Incentive Plan, Employee shall be
entitled to a bonus in the first year of One Hundred Twenty Five Thousand
Dollars ($125,000.00). Said bonus shall be payable on the dates established by
the Company for payment of quarterly and annual bonuses and shall be payable
only if Employee continues to remain in the employ of the Company on such date;
provided, however, that in the event the Company terminates Employee's
employment hereunder without cause pursuant to Section 5.4, Incentive Plan bonus
may be paid in accordance with Section 5.5.
2.3 EMPLOYEE BENEFITS. During the Term of Employment, Employee
shall be entitled to participate in the group medical, dental and disability
policies and other benefits maintained from time to time by the Company for the
benefit of senior officers of the Company. During the Term of Employment,
Employee shall be entitled to receive all other benefits, and to participate in
all other benefit plans, as are generally available to employees of the Company
on the same terms as other senior management employees. Employee shall be
entitled to reimbursement for all usual and customary business expenses in
reasonable amount incurred by Employee in the performance of his duties for the
Company in accordance with the Company's then current expense reimbursement
policies and guidelines.
2.4 STOCK OPTION. Employee shall receive an incentive stock
option in the form attached as EXHIBIT B-1 pursuant to which Employee shall be
entitled to purchase two hundred seventy-one thousand eight hundred fifty-eight
(271,858) shares of the Company's Common Stock at an exercise price of not more
than $1.20 per share and a non-statutory stock option in the form attached
hereto as EXHIBIT B-2 pursuant to which Employee shall be entitled to purchase
seventy-eight thousand one hundred forty-two (78,142) shares of the Company's
Common Stock at a price of not more than $1.20 per share.
3. VACATIONS. During the Term of Employment, Employee shall be entitled
to fifteen (15) days of paid vacation per year, plus a one-time carry-over of
the amount of accrued and unpaid vacation time and other personal time off from
Xxxxxxx International Systems Corporation ("FISC VACATION TIME"). Other than the
FISC Vacation Time, in no event shall Employee be entitled to accrue and carry
forward more than five (5) days of paid vacation from any calendar year to
another, and if Employee has reached this total, no further vacation days shall
accrue until the total of accrued but unused vacation days falls below such
maximum.
4. PLACE OF BUSINESS. During the Term of Employment, Employee shall
render services hereunder at the Company's principal executive offices in
Naples, Florida, or any successor principal office. Employee shall also be
available to travel for business purposes incident to the performance of his
duties, as required from time to time. Transportation, lodging and meal expenses
shall be incurred and reimbursed in accordance with the general policy of the
Company as adopted by the Company from time to time
5. EARLY TERMINATION.
5.1 TERMINATION UPON PERMANENT DISABILITY OR DEATH. This
Agreement shall automatically terminate upon the permanent disability or death
of Employee, subject to the obligation of the Company to pay Employee or
Employee's personal representative or designated beneficiary, as the case may
be, (i) the balance of Employee's salary and other benefits for the remainder of
the month in which disability or death occurs, (ii) a pro rata portion of any
bonus to which Employee was otherwise entitled under Section 2.2 based upon the
ratio the number of months employed (calculated through the end of the then
current month) bears to the bonus period of twelve (12) months and (iii) any
other disability benefits described in this Section 5.1 to which Employee may be
entitled. The Company will continue to pay Employee his regular salary during
any period during which Employee is incapable of continuing the further
performance of Employee's normal employment activities with the Company because
of a mental, emotional or physical injury, sickness or disorder. However, when
such period exceeds an aggregate of sixty (60) business days (exclusive of any
accrued vacation within the limits set forth above) out of any three hundred
sixty-five (365) consecutive calendar days, Employee shall be deemed permanently
disabled. Employee shall also be deemed permanently disabled if so certified by
any two physicians, or upon the expiration of any elimination period under any
disability insurance policy purchased by the Company for the benefit of
Employee. Should Employee become permanently disabled, Employee or his personal
representative shall be entitled to receive his termination compensation set
forth in subsections (i), (ii) and (iii) above, as well as any disability
benefits maintained for Employee by the Company, if any, pursuant to the terms
and subject to the conditions of any such applicable disability benefit program
or policy.
5.2 TERMINATION FOR CAUSE. During the Term of Employment, the
Company may at any time, without giving notice to Employee, immediately
terminate this Agreement if Employee (a) commits any act of embezzlement, theft,
fraud or dishonesty; (b) engages in unfair competition with the Company or any
subsidiary of the Company whether or not wholly-owned; (c) is convicted of any
felony; (d) breaches any material provision of the Confidentiality Agreement
entered into by Employee pursuant to Section 6 of this Agreement; (e) uses
illegal drugs or other substances or (f) willfully breaches any other material
provision of this Agreement. If Employee materially breaches or habitually
neglects or fails in any material way to perform the usual and customary duties
of his job, or any other duties required to be performed under the terms of this
Agreement, or the policies of the Company, the Company may, at its option,
terminate this Agreement by giving written notice of termination to Employee.
Any termination pursuant to either of the two preceding sentences shall be
without prejudice to any other remedy to which the Company may be entitled
either at law, in equity, or under this Agreement. Before the Company may
terminate this Agreement by reason of Employee's habitual neglect of or failure
to perform the usual and customary duties of his job or policies of the Company,
the Company must first notify Employee in writing, setting forth in detail those
duties and/or policies which Employee has habitually neglected or failed to
perform, and provide Employee a reasonable period of time, not to exceed thirty
(30) days, in which to cure such neglect or failure. If Employee does not cure
the specified areas of neglect of failure, the Company may terminate this
Agreement immediately by giving Employee written notice. At the time of any
termination for cause, Employee shall be entitled to receive any salary and
employment benefits which shall have accrued prior to the date of termination,
but shall not be entitled to any bonus or severance payments, salary or
employment benefits relating to periods subsequent to the date of termination,
subject to Employee's rights to continue medical and dental coverage under the
Company's group policy, at Employee's expense, as may be provided by law.
5.3 TERMINATION BY EMPLOYEE. This Agreement may be terminated
by Employee for any reason, or no reason, by giving thirty (30) days' written
notice of termination to the Company. Upon termination by Employee, all rights
accruing to Employee under the terms of this Agreement shall cease, and Employee
shall not be entitled to any bonus or severance payments, salary or employment
benefits, except to the extent earned and accrued prior to the termination date,
and subject to Employee's rights to continue medical and dental coverage under
the Company's group policy, at Employee's expense, as may be provided by law.
5.4 TERMINATION WITHOUT CAUSE. Employee's employment with the
Company during the Term of Employment may be terminated by the Company at any
time without cause, by the Company's giving thirty (30) days prior written
notice. A termination without cause, for purposes of this Agreement, means
termination by the Company other than as provided for in Sections 5.1 and 5.2.
5.5 SEVERANCE PAYMENTS. If Employee is terminated pursuant to
Section 5.4, Employee shall be entitled to severance pay in accordance with the
Company's normal payroll practices at the rate of Employee's salary for such
year set forth in Section 2.1 for a period of six (6) months following
termination together with fifty percent (50%) of the Incentive Plan target bonus
for such year, if any, described in Section 2.2. All bonuses shall be payable
only at the discretion of the Compensation Committee of the Board of Directors
and shall reflect Employee's performance to the date of termination. All
severance pay shall be payable in equal consecutive monthly installments on the
last day of each month following the effective date of Employee's termination
for the number of months of severance pay to which Employee is entitled
hereunder. Any pro rata bonus shall be payable on the effective date of
termination of employment. Employee understands and agrees that such payments
shall be his only entitlement as and for severance pay or severance
compensation. Upon termination pursuant to Section 5.4, except for the severance
payments stated above, all rights and obligations accruing to Employee under the
terms of this Agreement or otherwise shall cease, and Employee shall not be
entitled to any further salary or employment benefits, except to the extent
earned and accrued prior to such date, and subject to Employee's rights to
continue medical and dental coverage under the Company's group policy, at
Employee's expense, as may be provided by law.
6. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Concurrently with the
execution and delivery of this Agreement, Employee agrees to enter into the
Company's Confidentiality Agreement for senior executive officers of the Company
in the form attached as EXHIBIT C (the "CONFIDENTIALITY AGREEMENT"). In the
event of any inconsistency between the terms and provisions of this Agreement
and those of the Confidentiality Agreement, the terms and provisions of this
Agreement shall prevail.
7. NON-COMPETITION.
7.1 AGREEMENT NOT TO COMPETE. Employee agrees that during the
Term of Employment and for the period thereafter specified in the next sentence,
Employee will not engage, directly or indirectly, either as principal, agent,
consultant, proprietor, stockholder, director, officer or Employee, or
participate in the ownership, management, operation or control of any other
business engaged in the type of business conducted by the Company. Such
agreement not to compete shall extend after the date of termination for one year
if employee voluntarily terminates his employment and for a period of six (6)
months if the Company involuntarily terminates Employee's employment. This
Section 7.1 shall not apply to Employee's ownership of less than one percent
(1%) of the capital stock of any corporation having a class of capital stock
which is traded on any national stock exchange or in the over-the-counter
market.
7.2 SOLICITATION. During the Term of Employment, and for the
period of two (2) years thereafter, Employee agrees that he will not, without
the Company's prior written consent, solicit or encourage any of the employees
of the Company or Xxxxxxx International Systems Corporation ("FISC") to leave
the employ of the Company or FISC, or terminate or alter their contractual
relationships in a way that is adverse to the Company's or FISC's interest or,
during the period of Employee's employment, solicit business from any customer
of the Company on behalf of any competitor of the Company.
8. MISCELLANEOUS.
8.1 GOVERNING LAWS. It is the intention of the parties hereto
that the internal laws of the State of Florida (irrespective of its choice of
law principles) shall govern the validity of this Agreement, the construction of
its terms, and the interpretation and enforcement of the rights and duties of
the parties hereto.
8.2 BINDING UPON SUCCESSORS AND ASSIGNS. Subject to, and
unless otherwise provided in, this Agreement, each and all of the covenants,
terms, provisions, and agreements contained herein shall be binding upon, and
inure to the benefit of, the permitted successors, executors, heirs,
representatives, administrators and assigns of the parties hereto. Employee may
not assign this Agreement or any of Employee's rights hereunder except as
provided herein or with the prior written consent of the Company.
8.3 SEVERABILITY. If any provision of this Agreement, or the
application thereof, shall for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances shall be interpreted so as best to reasonably
effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision which will achieve, to the extent possible, the economic,
business and other purposes of the void or unenforceable provision.
8.4 ENTIRE AGREEMENT. This Agreement (together with the Option
and Confidentiality Agreement) constitutes the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof and
thereof and supersede all prior and contemporaneous agreements or understanding,
inducements or conditions, express or implied, written or oral, between the
parties with respect hereto and thereto.
8.5 AMENDMENT AND WAIVERS. Any term or provision of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of any breach hereof or default in the performance hereof
shall not be deemed to constitute a waiver of any other default or any
succeeding breach or default.
8.6 NO WAIVER. The failure of any party to enforce any of the
provisions hereof shall not be construed to be a waiver of the right of such
party thereafter to enforce such provisions.
8.7 NOTICES. Whenever any party hereto desires or is required
to give any notice, demand, or request with respect to this Agreement, each such
communication shall be in writing and shall be effective only if it is delivered
by personal service or mailed, United States certified mail, postage prepaid,
addressed as follows:
Company: 0000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000-0000
Attn: Chairman of the Board
Employee: To the address set forth on the signature
page hereof
Such communications shall be effective when they are received
by the addressee thereof; but if sent by certified mail in the manner set forth
above, they shall be effective no later than five (5) days after being deposited
in the United States mail. Any party may change its address for such
communications by giving notice thereof to the other party in conformity with
this Section.
8.8 FURTHER ASSURANCES. Each party agrees to cooperate fully
with the other parties and to execute such further instruments, documents and
agreements and to give such further written assurances, as may be reasonably
requested by any other party to better evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement.
8.9 INSURABLE INTEREST. Employee hereby grants to the Company
an insurable interest in Employee's life, and agrees and understands that the
Company may at any time or from time to time during the Term of Employment
choose to purchase and maintain key man life insurance on Employee.
8.10 EMPLOYEE'S REPRESENTATIONS. Employee represents and
warrants that he is free to enter into this Employment Agreement and to perform
each of the terms and covenants of it. Employee represents and warrants that he
is not restricted or prohibited, contractually or otherwise, from entering into
and performing this Employment Agreement, and that his execution and performance
of this Employment Agreement is not a violation or breach of any other agreement
between Employee and any other person or entity.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first hereinabove written.
EMPLOYEE'S ADDRESS FOR NOTICE: EMPLOYEE:
/s/ XXXXXXX X. XXXXXXXXX
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Xxxxxxx X. Xxxxxxxxx
COMPANY:
SMARTDISK CORPORATION
By: /s/ XXXXXXX X. XXXXXXXXX
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Name: Xxxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
