EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of January 1, 1998 by and between XXXXXX
XXXXXX, LTD., a New York corporation with offices at 00-00 Xxxxxxx Xxxxxx, Xxxx
Xxxxxx Xxxx, X.X. 00000 (the "Company"), and XXXXXX XXXXXX, an individual
residing at 0000 Xxxxx Xxxxxx, Xxx Xxxx Xxxx, XX 00000 (the " Executive").
W I T N E S S E T H
WHEREAS, the Company desires to secure the continued services of
Executive upon the terms and condition hereinafter set forth; and
WHEREAS, Executive desires to continue to render services to the
Company upon the terms and conditions herein set forth.
NOW, THEREFORE, the parties mutually agree as follows;
SECTION 1. EMPLOYMENT. The Company hereby employs Executive and
Executive hereby accepts such employment, as an executive of the Company,
subject to the terms and conditions set forth in this Agreement.
SECTION 2. DUTIES. Executive shall serve as the Company's Chief
Financial Officer until such time as the Company hires an individual in such
capacity and thereafter, Executive shall for the remainder of the Term (as
hereinafter defined) serve as the Treasurer and Controller of the Company. The
Executive shall perform such duties as may reasonably be assigned to him from
time to time by the Chief Executive Officer of the Company. During the term of
this Agreement, Executive shall devote all of his business time to the
performance of his duties hereunder unless otherwise authorized by the Board of
Directors.
SECTION 3. TERM OF EMPLOYMENT. The term of Executive's employment,
unless sooner terminated in accordance with the provisions set forth herein,
shall be for a period of four (4) years commencing January 1, 1998 (the "Term").
The terms of this Agreement shall be automatically extended for one additional
term of one year unless either parties notifies the other in writing by
certified mail return receipt requested at least 90 days prior to the expiration
of the Term, of its, intention not to extend the Term. If the Executive advises
the Company of his intent not to extend the Term in writing by certified mail
return receipt requested, he shall not be entitled to any additional
compensation. [However, if the Company advises the Executive of its intent not
to extend the Term (other than for Cause or Total Disability solely as set forth
in Sections 5 and 6), then Executive shall be entitled to receive severance
compensation equal to the then applicable Base Salary for three month period
commencing on the expiration of the Term, to be paid in accordance with the
Company's customary payroll practices, as long as Executive continues to be in
compliance with Section 8 hereof.]
SECTION 4.1 SALARY. The Company shall pay to Executive a base salary of
One Hundred and Forty Thousand Dollars ($140,000) per annum, subject to
increases in accordance with the terms of the last sentence of this Section 4.1
(the "Base Salary"), less such deductions as shall be required to be withheld by
applicable law and regulations. All salaries payable to Executive shall be paid
at such regular weekly, biweekly or semi-monthly time or times as the Company
make payment of its regular payroll in the regular course of business.
Commencing on the third anniversary of the date hereof, and on each anniversary
thereafter during the Term, the Base Salary shall be increased by 10% of the
then Base Salary.
SECTION 4.2 BONUSES. Subject to the approval of the Company's 1998
Stock Plan by the stockholders of the Company, the Executive shall receive an
option to purchase 25,000 shares of Common Stock on June 30 of each year during
the Term. The options comprising the option shall vest quarterly (6,250 shares)
over a one (1) year period commencing on June 30, 1998 and be exercisable at a
price equal to the average closing bid price of the Company's shares of Common
Stock on June 30. The Company agrees to reserve under a stock plan approved by
its stockholders 100,000 shares of the Company's Common Stock for issuance upon
the exercise of such option. The Company shall use its best efforts to obtain
approval by the Company's stockholders of the 1998 Stock Plan so that the
Company may lawfully issue the options contemplated by this Section 4.2.
SECTION 4.3 AUTOMOBILE ALLOWANCE. The Company shall, at the direction
of Executive, either reimburse Executive for, or directly pay the cost of, the
use of an automobile during the Term and all usual expenditures in connection
therewith; i.e. fuel, insurance, parking, customary maintenance and repairs,
etc. in an amount not to exceed $500 per month.
SECTION 4.4 BENEFITS. Executive shall be entitled to participate in
such pension, profit sharing, group insurance, options plans, hospitalization,
and group health and benefit plans and all other benefits and plans as the
Company provides to its senior Executives except current benefits and plans may
not be removed or altered to the determent of Executive.
SECTION 5 TERMINATION.
SECTION 5.1 DEATH. This Agreement shall terminate upon the death of
Executive; provided however, that the Company shall continue to pay to the
estate of Executive the salary and all other benefit as set forth herein for the
twelve (12) months period immediately subsequent to the date of Executive's
death.
SECTION 5.2 TERMINATION DUE TO TOTAL DISABILITY.
Resignation. In the event Executive is discharged due to
his "Total Disability" (as those terms are defined below) or in the event
Executive resigns, then upon such occurrence, this Agreement shall be deemed
terminated and the Company shall be released from all obligations to Executive
with respect to this Agreement, except obligations accrued prior to
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such termination date and as provided herein.
SECTION 5.3 "FOR CAUSE". As used herein, the term "For Cause" shall
only mean: (i) a deliberate and intentional breach by Executive of a substantial
and material duty and responsibility under the Agreement that results in
material harm to the Company unless such breach is committed with reasonable
belief that such breach was not contrary to the best interests of the Company,
and is not remedied, if capable of being remedied, within thirty (30) days after
receipt of written notice by certified mail return receipt requested from the
Company specifying such breach; or (ii) Executive's plea of guilty or nolo
contendere to, or conviction of, a felony, which conviction or plea causes
material damage to the reputation or financial position of the Company.
In the event that the Executive is discharged for Cause, then upon such
occurrence, this Agreement shall be deemed terminated and the Company shall be
released from all obligations to the Executive with respect to this Agreement,
except obligations which accrue prior to such termination date and as provided
herein.
SECTION 5.4 TERMINATION OTHER THAN FOR TOTAL DISABILITY. In the event
Executive is discharged other than for Cause or due to his "Total Disability",
then such termination shall only be effective if he receives written notice
thereof by certified mail return receipt requested which notice properly sets
forth the Company's agreement to pay to Executive the balance of his benefit
including salary that would have been paid by the Company pursuant to this
Agreement, over the full Term of the Agreement if the The Company had not
terminated this Agreement. Such amount shall be payable in two (2) installment
as follows (i) Fifty (50%) percent on January 1 immediately following such
termination and the balance of fifty (50%) percent one year after.
SECTION 5.5 TERMINATION UPON CHANGE OF CONTROL.
(a) If a Change of Control (as defined below) occurs without the
Executive's prior written consent, the Executive shall have the right to
terminate this Agreement. At least ten (10) days prior to any such proposed
Change of Control, the Company shall notify Executive of its intention to effect
such Change of Control, and the Executive shall thereupon have five (5) days
from the actual receipt of such notice to give notice of his intention to
terminate this Agreement in the event of the Change of Control. If,
notwithstanding such notice by the Executive, the Company proceeds with such
Change of Control, this Agreement shall be deemed terminated as of the effective
date of the event constituting the Change of Control and the Executive shall
receive in cash, within ten (10) days of termination, (i) any compensation
accrued and unpaid pursuant to Section 4 of this Agreement, (ii) an amount equal
to the balance of Executive's salary that would have been paid by the Company
pursuant to Section 4.1 hereof over the full Term of this Agreement as if the
Agreement had not been terminated, (iii) an amount equal to Executive's bonus,
if any, for the preceding 12-month period ended December 31, multiplied by the
remaining years (including any fractional years) left under this Agreement since
the date such
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bonus was determined by the Board of Directors plus (iv) an amount equal to
$200,000 as severance under this Agreement. In the event that any payment (or
portion thereof) to the Executive under this Section 5.5 is determined to
constitute an "excess parachute payment," under Sections 28OG and 4999 of the
Internal Revenue Code of 1986, as amended, the following calculations shall be
made:
(i) The after-tax value to the Executive of the payments under this
Section 5.5 without any reduction; and
(ii) The after-tax value to the Executive of the payments under
this Section 5.5 as reduced to the maximum amount (the "Maximum Amount") which
may be paid to the Executive without a portion of the payments constituting an
"excess parachute payment".
If, after applying the agreed upon calculations set forth above, it
is determined that the after-tax value determined under clause (ii) above is
greater than the after-tax value determined under clause (i) above, the payments
to Executive under this Section 5.5 shall be reduced to the Maximum Amount.
(b) If a Change of Control occurs, regardless of whether the Executive
has consented to such Change of Control, Executive shall have the right to
resign.
SECTION 5.6 "CHANGE OF CONTROL". As used herein, the term "Change of
Control" shall mean:
(a) When any "person" as defined in Section 3(a)(9) of the Securities
Exchange Act of 1934. as amended (the "Exchange Act"), and as used in Section
13(d) and 14(d) thereof. including a "group" as defined in Section 13(d) of the
Exchange Act, but excluding the Company or any subsidiary or any affiliate of
the Company or any employee benefit plan sponsored or maintained by the Company
or any subsidiary of the Company (including any trustee of such plan acting as
trustee). becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding securities; or
(b) When, during any period of twenty-four (24) consecutive months, the
individuals who, at the beginning of such period, constitute the Board of
Directors (the "Incumbent Directors") cease for any reason other than death to
constitute at least a majority thereof, provided, however, that a director who
was not a director at the beginning of such 24-month period shall be deemed to
have satisfied such 24-month requirement (and be an Incumbent Director) if such
director was elected by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent Directors
either actually (because they were directors at the beginning of such 24-month
period) or through the operation of this proviso; or
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(c) The occurrence of a transaction requiring stockholder approval for
the acquisition of the Company by an entity other than the Company or a
subsidiary or an affiliate of the Company through purchase of assets, or by
merger, or otherwise.
SECTION 6 DISABILITY
SECTION 6.1 TOTAL DISABILITY. In the event that after Executive has
failed to have performed his regular and customary duties for a period of ninety
(90) consecutive days or for any one hundred and eighty (180) days out of any
three hundred and sixty (360) days period. And before Executive has become
"Rehabilitated" (as hereinbelow defined) a majority of the members of the Board
of Directors of the Company, exclusive of Executive may vote to determine that
Executive is mentally or physically incapable or unable to continue to perform
such regular and customary duties of employment and upon the date of written
notice to Executive by certified mail return receipt requested of such majority
vote, Executive shall be deemed to be suffering from a "Total Disability". As
used herein, the term "Rehabilitated" shall mean such time as Executive is
willing, able and commences to devote his time and energies to the affairs of
the Company to a reasonable extent and in a similar manner that he did prior to
this disability.
SECTION 6.2 PAYMENT DURING DISABILITY. In the event Executive is unable
to perform his duties hereunder by reason of a disability, prior to the time
such disability is deemed by a Total Disability in accordance with the
provisions of Section 6.1 above, the Company shall continue to pay Executive his
benefit including salary pursuant to this Agreement for the twelve (12) month
period immediately subsequent to the date of determination of Total Disability.
SECTION 7. VACATION. Executive shall be entitled to a vacation for four
(4) weeks per year during which period all benefits including salary shall be
paid in full. Executive shall take his vacation at such time as Executive and
the Company shall determine is mutually convenient said vacation shall be
cumulative or taken in extra pay.
SECTION 8. DISCLOSURE OF CONFIDENTIAL INFORMATION. Executive recognizes
that he has had and will continue to have access to secret and confidential
information regarding the Company, including but not limited to its customer
list, products, know-how, and business plans. Executive acknowledges that such
information is of great value to the Company, is the sole property of the
Company, and has been and will be acquired by him in confidence. In
consideration of the obligations undertaken by the Company herein, Executive
will not, at any time, during his employment hereunder, reveal, divulge or make
known to any person, any information concerning the Company acquired by
Executive during the course of his employment, which is treated as confidential
by the Company. Provided same is not otherwise in the public domain or
information that Executive could have and did learned separate and apart from
his duties set forth herein, provided said information would not be detrimental
to the Company this provision shall survive Executive's employment hereunder for
a period of six months.
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SECTION 9.1 ASSIGNMENTS. Neither Executive nor the Company may assign
or delegate any of their rights or duties under this Agreement without the
express written consent of the other.
SECTION 9.2 ENTIRE AGREEMENT. This Agreement constitutes and embodies
the full and complete understanding and agreement of the parties with respect to
Executive's employment by the Company, supersedes all prior understanding and
agreements, whether oral or written, between Executive and the Company,
including by not limited to the prior Employment Agreement, and shall not be
amended, modified or changed except by an instrument in writing executed by the
party to be charged. The invalidity of one or more provisions of this Agreement
shall not invalidate any other provision of this Agreement. No waiver by either
party of any provision or condition to be performed shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same time or any prior or
subsequent time.
SECTION 9.3 BINDING EFFECT. This Agreement shall inure to the benefit
of, be binding upon and enforceable against, the parties hereto and their
respective successors, heirs, beneficiaries and permitted assigns.
SECTION 9.4 HEADINGS. The headings contained in this Agreement are for
convenience of reference only and shall not affect any way the meaning or
interpretation of this Agreement.
SECTION 9.5 NOTICES. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given when delivered, sent by registered
or certified mail, return receipt requested, postage prepaid or by private
overnight mail service (e.g. Federal Express) to the party at the address set
forth above or to such other address as either party may hereafter given notice
of accordance with provision hereof. Notice shall be deemed given on the sooner
of the date actually received or the third business day after sending.
SECTION 9.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to such State's conflicts of laws provisions and each of the parties
hereto irrevocably consents to the jurisdiction and venue of the federal and
state courts located in the Sate of New York, County of New York.
SECTION 9.7 COUNTERPARTS. This Agreement may be executed simultaneously
into two or more counterparts, each of which shall be deemed and original, but
all of which together shall constitute one of the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
XXXXXX XXXXXX, LTD
BY: /s/ XXXXXX XXXXXX
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Xxxxxx Xxxxxx
Chief Executive Officer and President
BY: /s/ XXXXXX XXXXXX
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Xxxxxx Xxxxxx
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