Exhibit 10.9
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of the 15th day of March, 1999 by and between
INTERNATIONAL DISPENSING CORPORATION, a Delaware corporation, with offices at
0000 Xxxxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxx Xxxx 00000 (the "Company"),
and XXXX XXXXXXXX, an individual residing at 000 Xxxxxxxxx Xxxx, Xxxxxxxxxxx,
Xxxxxxxx 00000 (the "Employee").
W I T N E S S E T H :
WHEREAS, the parties desire to enter into this agreement to set forth
the terms of the Employee's employment by the Company.
NOW, THEREFORE, in consideration of the mutual premises and covenants
set forth herein and for other good and valuable consideration, the receipt,
adequacy and legal sufficiency of which are hereby acknowledged, the Company and
the Employee mutually agree as follows:
1. EMPLOYMENT AND DUTIES.
(a) EMPLOYMENT. The Company agrees to employ the Employee, and the
Employee agrees to accept employment with the Company, on the terms and
conditions hereinafter set forth.
(b) SCOPE OF DUTIES. The Employee's title shall be President and
Chief Executive Officer of the Company. The Employee shall render services
solely for the benefit, and on behalf of the Company and its subsidiaries as
directed by the Board of Directors of the Company. The Board of Directors of the
Company shall have the power to determine the general and specific duties to be
performed by the Employee and the means and the manner by which those duties
shall be performed including, without limitation, that the Employee shall be
responsible for overseeing the day
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to day operations of the Company, developing and executing a strategic plan for
the Company and such other areas as the Employee and senior management deem
appropriate. The Company shall use reasonable efforts to schedule an Annual
Meeting of Stockholders to take place on or before September 30, 1999 and cause
the Employee to be nominated for election as a director of the Company at such
meeting.
(c) EXCLUSIVE SERVICE. The Employee shall be required, and does
hereby agree, to devote his full working time and attention to the duties
imposed upon him under this Agreement. The Employee shall perform his duties in
a diligent manner; shall not engage in activities which are or could be
detrimental to the existing or future business of the Company; and shall observe
and conform to all laws, customs and standards of business ethics and honest
business practices.
(d) PROFESSIONAL STANDARDS. Recognizing and acknowledging that it
is essential for the protection and enhancement of the name and business of the
Company and the good will pertaining thereto, the Employee shall perform his
duties under this Agreement professionally and in accordance with the standards
established by the Company from time to time; and the Employee shall not act,
and shall refrain from acting, in any manner that could harm or tarnish the
name, business or income of the Company or the good will pertaining thereto.
2. COMPENSATION.
(a) BASE SALARY. For all services rendered by the Employee during
the term of this Agreement, the Company shall pay the Employee an annual base
salary of $240,000, payable in accordance with the Company's customary payment
policies and periods.
(b) BONUSES. The Employee shall be eligible to receive performance
bonuses determined by the Board of Directors in its sole discretion.
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(c) STOCK OPTIONS. On the date hereof the Company has granted to
the Employee non-qualified stock options under the Company's 1998 Stock Option
Plan (the "Plan"). If the Company extends the term of this Agreement pursuant to
Section 7(b), then effective March 15, 2001 the Company shall grant to the
Employee non-qualified stock options under the Plan (or any other stock option
plan then in existence under which options may be granted to the Employee) to
purchase an additional 100,000 shares. Certain of the terms of the options
referred to in the preceding two sentences are set forth on Exhibit A hereto.
The Employee shall also be eligible for additional awards of stock options under
the Plan or otherwise. The granting of said options shall be within the sole
discretion of the Board of Directors or the Committee thereof administering the
Plan or any other option plan under which options may be granted to the
Employee.
(d) FRINGE BENEFITS.
(i) During the term of this Agreement, the Company at its sole
cost shall provide to the Employee and the Employee's family,
hospital, major medical and dental insurance.
(ii) During the term of this Agreement and provided that the
Employee is insurable, the Company shall obtain and pay the
premiums on a term life insurance policy on the life of the
Employee in the amount of $1,000,000, the beneficiary or
beneficiaries of which shall be designated by the Employee.
(iii) The Company may from time to time provide to, or withdraw
from, the Employee certain other fringe benefits. Nothing
herein shall require the Company to adopt, maintain or
continue any such fringe benefit.
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(e) VACATION. During the term of this Agreement, the Employee
shall be entitled to a vacation of twenty (20) working days per year, which may
be taken all at once or from time to time; provided, however, that (i) the
Employee shall schedule such vacation time so as to mitigate the adverse effects
to the Company of the Employee's absence; and (ii) the Employee shall give the
Company at least thirty (30) days notice of consecutive vacation days in excess
of five (5) to be taken by the Employee at any one time.
3. NON-COMPETITION.
(a) In view of the Employee's knowledge of the trade secrets and
other proprietary information relating to the business of the Company and its
subsidiaries and their customers and dealers which the Employee has heretofore
obtained and is expected to obtain during the term the Employee is employed
under this Agreement (the "Employment Period"), and in consideration of the
compensation to be received hereunder, the Employee agrees: (i) that he will not
during the Employment Period Participate In (as such term hereinafter defined)
any other business or organization if such business or organization now is or
shall then be competing with or be of a nature similar to the business of the
Company or its subsidiaries; and (ii) (A) for a period of two (2) years after
the Termination Date (as defined in Section 7) due to a termination of this
Agreement for Cause (as defined in Section 8(b)) or (B) for such period as the
Company shall continue to pay to the Employee his salary and insurance benefits
in accordance with Section 9(c) after a termination of the Employee's employment
Without Cause (as defined in Section 8(c)), he will not in any geographic area
in which the Company does business as of the Termination Date compete with or be
engaged in the same business as, or Participate In any other business or
organization which during such period competes with or is engaged in the same
business as, the Company or its subsidiaries with respect to any service offered
or activity engaged in up to the Termination Date, except that in each case the
provisions of
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this Section 3 will not be deemed breached merely because the Employee owns not
more than 2% of the outstanding common stock of a corporation, if, at the time
of its acquisition by the Employee, such stock is listed on a national
securities exchange, is reported on NASDAQ, or is regularly traded in the
over-the-counter market by a member of a national securities exchange.
(b) The term "Participate In" shall mean: "directly or
indirectly, for his own benefit or for, or through any other person, firm, or
corporation, own, manage, operate, control, loan money to (provided, that an
investment in debt instruments issued pursuant to an effective registration
statement under the Securities Act shall not be deemed to be a loan), or
participate in the ownership, management, operation, or control of, or be
connected as a director, officer, employee, partner, consultant, agent,
independent contractor, or otherwise with, or acquiesce in the use of his name
in."
(c) During the Employment Period and, in the case of the
termination of the Employee's employment for Cause only, for a period of two (2)
years after the Termination Date, the Employee will not directly or indirectly:
(i) reveal the name of, solicit, use or interfere with, or
endeavor to entice away from the Company (or any of its
subsidiaries) any of its customers, vendors or employees,
or
(ii) employ any person who, at any time up to the Termination
Date, was an employee of the Company or its subsidiaries
without the written consent of the Company.
(d) The Employee agrees that the provisions of this Section 3 are
necessary and reasonable to protect the Company in the conduct of its business.
If any restriction contained in this Section 3 shall be deemed to be invalid,
illegal, or unenforceable by reason of the extent, duration, or geographical
scope thereof, or otherwise, then the court making such determination shall have
the right to reduce such extent, duration, geographical scope, or other
provisions hereof, and in its reduced form such restriction shall then be
enforceable in the manner contemplated hereby.
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4. CONFIDENTIAL INFORMATION. All information which the Employee may
now possess, may obtain during or after the Employment Period, or may create
prior to the end of the Employment Period relating to the business of the
Company or its subsidiaries or of any of their respective customers or vendors
(collectively, the "Confidential Information") shall not be published,
disclosed, or made accessible by him to any other person, firm or corporation
either during or after the Employment Period or used by him except during the
Employment Period in the business and for the benefit of the Company without the
prior written consent of the Company. The Employee shall return all tangible
evidence of such Confidential Information to the Company prior to or at the end
of the Employment Period.
5. RIGHTS OF THE COMPANY.
(a) Any interest in copyrights, copyrightable works,
developments, discoveries, designs and processes, patents, patent applications,
inventions and technological innovations (collectively, "Inventions") which the
Employee (i) owns, conceives of or develops, alone or with others, (A) relating
to the business of the Company or its subsidiaries or any business in which the
Company (or its subsidiaries) contemplates being engaged or (B) which anticipate
research or development of the Company or its subsidiaries, or (ii) conceives of
or develops utilizing the time, material, facilities or information of the
Company or its subsidiaries, in either case during the Employment Period, shall
belong to the Company.
(b) As soon as the Employee owns, conceives of or develops any
Invention, the Employee shall immediately communicate such fact in writing to
the Board of Directors of the Company. Upon the request of the Company, the
Employee shall, without further compensation but at the Company's expense
(subject to clause (i) below) execute all such assignments and other documents
(including applications for trademarks, copyrights and patents and assignments
thereof) and
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take all such other action as the Company may reasonably request, including
obtaining spousal consents or waivers, (i) to vest in the Company all right,
title and interest of the Employee in and to such Inventions, free and clear of
all liens, mortgages, security interests, pledges, charges and encumbrances (the
Employee to take such action, at his expense, as is necessary to remove all such
liens) and (ii) if patentable or copyrightable, to obtain patents or copyrights
(including extensions and renewals) therefor in any and all jurisdictions in and
outside the United States in the name of the Company or in such other name(s) as
the Company shall determine.
6. INSURANCE. The Employee agrees to submit to such medical
examinations as may be reasonably required by the Company to enable the Company
to obtain the term life insurance policy referred to in Section 2(d)(ii) and, at
its option, key man life insurance on the life of the Employee in such amount
and with such insurer as the Company may determine in its sole discretion.
7. EMPLOYMENT PERIOD. (a) Unless extended in accordance with Section
7(b), the Employment Period shall commence on the date of this Agreement and
shall continue for a term ending on March 14, 2001:
(b) The Company may extend the term of this Agreement beyond
March 14, 2001 for one or two more years at its sole option, by giving written
notice to the Employee of such extension. Such notice shall be given not later
than June 14, 2000 and shall state the new ending date of the term of this
Agreement (either March 14, 2002 or March 14, 2003).
(c) Notwithstanding Sections 7(a) and 7(b), the term of this
Agreement shall end on the date on which any of the following events occur (the
date the term of this Agreement ends as a result of the expiration of the term
as provided in Sections 7(a) or 7(b) or the occurrence of the events set forth
below is referred to as the "Termination Date");
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(i) the death of the Employee;
(ii) the voluntary resignation of the Employee;
(iii) the termination by the Board of Directors of the
Employee's employment for Disability (as hereinafter
defined);
(iv) the termination by the Board of Directors of the
Employee's employment for Cause (as hereinafter defined);
or
(v) the termination by the Board of Directors of the
Employee's employment Without Cause (as hereinafter
defined).
8. DEFINITIONS RELATING TO TERMINATION
(a) DISABILITY
The term "Disability" shall mean any physical or mental
condition of the Employee which, in the reasonable discretion of the Board of
Directors, after consultation with the Employee's physician, materially impairs
the Employee's ability to render the services to be performed by him hereunder
for a period of 90 consecutive days or for at least 120 days in any consecutive
180 day period.
(b) CAUSE
The term "Cause" shall mean the good faith finding by the
Board of Directors of the Company upon resolution adopted by it of the existence
of any one of the following:
(i) The Employee's failure or refusal to perform specific written
directives consistent with his duties and responsibilities as set
forth in Section 1 hereof, which lack of performance is not cured
within 15 days after written notice thereof or 30 days if at the
15th day and thereafter the Employee is diligently attempting to
cure;
(ii) Excessive use of alcohol or the use of illegal drugs, interfering
with performance of the Employee's obligations under this
Agreement;
(iii) Conviction of a felony or of any crime involving moral turpitude
or fraud;
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(iv) The commission by the Employee of an act of embezzlement or other
similar act;
(v) The commission by the Employee of any willful or intentional act
which the Employee reasonably should have contemplated would have
the effect of injuring the reputation, financial condition,
business or business relationships of the Company and/or the
Employee; or
(vi) Any material breach (not covered by any of the clauses (i)
through (v) hereof) of any of the provisions of this Agreement,
if such breach is not cured within 30 days after written notice
thereof to by the Board of Directors.
If the Employee terminates his employment with the Company other than for Good
Reason (as hereinafter defined), the cessation of employment will be treated as
a termination for Cause.
(c) WITHOUT CAUSE
The term "Without Cause" shall mean a determination of the
Board of Directors to terminate the Employee for any
reason other than death, Disability or Cause.
(d) GOOD REASON
The term "Good Reason" shall mean (i) any removal of the
Employee while he is employed hereunder from his position as an officer of the
Company, except in connection with termination or suspension of the Employee's
employment for death, Disability or Cause, (ii) a breach by the Company of any
material provision of this Agreement or (iii) the voluntary resignation of the
Employee within 90 days after the occurrence of a Change of Control (as defined
in Section 8(e)).
(e) CHANGE OF CONTROL.
A "Change of Control" shall be deemed to have occurred if:
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(i) any "person" (as defined in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1994, as amended (the "Exchange
Act") becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of
the Company representing more than fifty percent (50%) of the
combined voting power of the Company's then outstanding
securities;
(ii) there shall cease to be a majority of the Board of
Directors comprised as follows: individuals who on the date of
this Agreement constitute the Board of Directors, the Employee
and any new director(s) whose election by the Board of Directors
or nomination for election by the Company's stockholders was
approved by a vote of at a majority of the directors then still
in office who either were directors or whose election or
nomination for election was previously so approved; or
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other
than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity)
at least fifty percent (50%) of the combined voting power of the
voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or
the stockholders of the Company approve a plan of complete
liquidation of the Company or an
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agreement for the sale or disposition by the Company of all or
substantially all the Company's assets.
9. EFFECT OF TERMINATION.
(a) If the Employee's employment is terminated for Disability,
for Cause or upon his death, the Employee or his estate shall be paid his Base
Salary and other benefits hereunder through the Termination Date.
(b) If the Employee terminates his employment by voluntarily
resigning for Good Reason, the Employee shall be paid his Base Salary and other
benefits through the date which is 180 days after the Termination Date.
(c) If the Employee's employment is terminated Without Cause, the
Company shall until the end of the term of this Agreement then in effect (either
March 14, 2001, March 14, 2002 or March 14, 2003) continue to (i) pay the
Employee his salary and (ii) provide the Employee and the Employee's family,
hospital, major medical and dental insurance equivalent to the insurance
provided on the Termination Date.
(d) Irrespective of the basis for the termination of the
Employee's employment, all benefits, if any, other than base salary, insurance
(as described in Section 9(c)) and rights under stock options, shall cease as of
the Termination Date, other than COBRA rights which shall continue to the extent
provided thereunder.
10. ARBITRATION. Any controversy or claim arising out of or relating
to this Agreement, or any breach or termination thereof, shall be settled by
arbitration in New York, New York in accordance with the laws of the State of
New York and rules then obtaining of the American Arbitration Association or any
successor thereto. Within ten (10) days after a request for arbitration by one
party to the other, the Company and the Employee shall each select one
arbitrator. Within ten
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(10) days after the second of such arbitrators has been selected, the two
arbitrators thereby selected shall choose a third arbitrator who shall be the
Chairman of the panel. If the first two arbitrators selected cannot agree upon a
third arbitrator, the American Arbitration Association shall name the third
arbitrator. The arbitration shall be held in New York, New York. The arbitrators
may grant injunctions or other relief in such dispute or controversy. In the
arbitration, the parties shall be entitled to pre-hearing discovery. The
decision of the arbitrators shall be final, conclusive and binding on the
parties to the arbitration. In connection with such arbitration and the
enforcement of any award rendered as a result thereof, the parties hereto
irrevocably consent to the personal jurisdiction of the federal and state courts
located in New York, and further consent that any process or notice of motion or
other application to the said Courts or judges thereof may be served inside or
outside the State of New York by registered mail or personal service, provided a
time period of at least twenty (20) days for appearance is allowed. Since a
breach of the provisions of Sections 3, 4 and 5 may result in irreparable injury
to the Company and may not adequately be compensated by money damages, the
Company shall be entitled, in addition to any other right and remedy available
to it, to an injunction issued by the foregoing courts or in the Arbitration
proceeding restraining such breach or a threatened breach (and in either case no
bond or other security shall be required in connection therewith) and the
Employee hereby consents to the issuance of such injunction. This Section 10
shall survive the termination (by expiration or otherwise) of this Agreement.
11. MODIFICATION. This Agreement sets forth the entire understanding
of the parties with respect to the subject matter hereof, supersedes all
existing agreements between them concerning such subject matter, and may be
modified only by a written instrument duly executed by each party.
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12. NOTICES. Any notice or communication to be given hereunder by any
party to the other shall be in writing and shall be deemed to have been given
when personally delivered or transmitted by facsimile, or three (3) days after
the date sent by registered or certified mail, postage prepaid, as follows:
(a) if to the Company, addressed to it at:
0000 Xxxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Attention: Board of Directors
with copies to:
Wolf, Block, Xxxxxx and Xxxxx-Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Bring, Esq.
(b) if to the Employee, addressed to him at:
000 Xxxxxxxxx Xxxx
Xxxxxxxxxxx, Xxxxxxxx 00000
or to such other persons or addresses as may be designated in writing by the
party to receive such notice.
13. WAIVER. Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing.
14. ASSIGNMENT. The Employee's rights and obligations under this
Agreement shall not be transferable by assignment or otherwise. The Company may
assign its rights and obligations
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hereunder to any of its subsidiaries or affiliates. The Company will provide
notice of such assignment to the Employee.
15. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the Employee and his heirs and personal
representatives, and shall be binding upon and inure to the benefit of the
Company and its successors and assigns.
16. HEADINGS. The headings in this Agreement are solely for the
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
17. JURISDICTION. The validity and interpretation of this Agreement
shall be construed in accordance with and be governed by the laws of the State
of New York.
18. ATTORNEY'S FEES. If a legal action or other proceeding is brought
for enforcement of this Agreement because of an alleged dispute, breach,
default, or misrepresentation in connection with any of the provisions of this
Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorney's fees and costs incurred, in addition to any other relief
to which they may be entitled.
19. SEVERABILITY. The provisions of this Agreement are severable and
should any provision hereof be void, voidable or unenforceable under any
applicable law, such void, voidable or unenforceable provision shall not affect
or invalidate any other provision of this Agreement, which shall continue to
govern the relative rights and duties of the parties as though the void,
voidable or unenforceable provision were not a part hereof.
20. SURVIVAL. All warranties, representations, indemnities, covenants
and other agreements of the parties hereto shall survive the execution, delivery
and termination of this Agreement and shall, notwithstanding the execution,
delivery and termination of this Agreement, continue in full force and effect.
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21. ACKNOWLEDGMENT. The Employee specifically acknowledges that:
the Employee has read and understands all of the terms of this Agreement; in
executing this Agreement, the Employee does not rely on any inducements,
agreements, promises or representations of the Company or any agent of the
Company, other than the terms and conditions specifically set forth in this
Agreement; the Employee has had an opportunity to consult with independent
counsel with respect to the execution of this Agreement; and that the Employee
has made such investigation of the facts pertaining to this Agreement and of all
the matters pertaining hereto as he deems necessary.
22. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, but both of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Company and the Employee have executed this
Agreement on the day and year first above written.
INTERNATIONAL DISPENSING CORPORATION
By: /s/ Xxxxxxx Xxxxxxxxx
--------------------------
Xxxxxxx Xxxxxxxxx
Executive Vice President
/s/ Xxxx Xxxxxxxx
--------------------------
Xxxx Xxxxxxxx
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Terms of Options
Granted on the Date of this Agreement
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Number of Shares: 400,000
Exercisability: 300,000 shares are exercisable from and after
March 15, 1999; the remaining 100,000 shares shall
become exercisable from and after July 1, 2000.
Exercise Price: The average of high bid and low asked prices per
share of the Company's Common Stock in the over-
the-counter market on March 15, 1999.
Term of Options: Seven (7) years for the options to purchase
300,000 shares and ten (10) years for the options
to purchase 100,000 shares.
Termination: The option will terminate on the termination of
the Employee's employment with the Company for any
reason provided that, except in the case of a
termination for Cause (in which case no portion of
the option may be exercised), it may be exercised
within three months after such date to the extent
exercisable on the date of termination, or within
one year after the date of termination of
employment due to death or Disability to the
extent exercisable on the date of such a
termination.
To be Granted Effective March 15, 2001
if the Term of this Agreement is Extended
-----------------------------------------
Number of Shares: 100,000
Exercisability: If the term of this Agreement is extended by only
one year, then all 100,000 shares shall be
exercisable from and after March 1, 2002; if the
term of this Agreement is extended by two years,
then 50,000 shall be exercisable from and after
March 15, 2002 and the remaining 50,000 shares
shall be exercisable from and after March 1, 2003.
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Exercise Price: The average of the high bid and low asked prices
per share of the Company's Common Stock in the
principal market on which such stock is quoted or
traded on March 15, 2001.
Term of Option: Five (5) years
Termination: Same as for options granted on date of this
Agreement.
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