MCS&W, LLP Draft
April 14, 1997
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of May 28, 1987, by and between TRANSITION
ANALYSIS COMPONENT TECHNOLOGY, INC. (the "Employer"), a Delaware corporation,
with offices c/o Zeus Components, Inc. ("Zeus"), 000 Xxxxxxx Xxxxxx, Xxxx
Xxxxxxx, Xxx Xxxx and XXXXXXX XXXX, residing at 00000 Xxxxxxxxx, Xxxxxxx Xxxxx,
Xxxxxxxxxx 00000 (the "Employee").
W I T N E S S E T H :
WHEREAS, the Employee has served and continues to serve as the Corporate
National Strategic Accounts Manager of Zeus;
WHEREAS, the Employer is a wholly-owned subsidiary of Zeus which has been
created to develop a data base of certain components for military equipment;
WHEREAS, the Employer desires that the Employee enter into this Employment
Agreement and the Employee is willing to enter into this Employment Agreement
for his services as Vice President of Sales and Marketing of the Employer, all
on the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and obligations hereinafter set forth, the parties hereto agree as follows:
1. Definitions. Except as otherwise defined in this Agreement, as used
herein, the following terms shall have the meanings hereinafter set forth:
(a) "Business Day" shall mean a day on which banks are open for
business in both Los Angeles, California and New York, New York.
(b) "Invoice Price" shall mean the invoiced price of any good or
service of the Employer at its facility, excluding any taxes, freight,
shipping, handling, insurance, export fees, duties or other such charges,
discounts, rebates, adjustments, allowances, credits, voided transactions,
refunds, commissions paid to third parties, costs of collection, or similar
charges.
(c) "Invoice" shall mean the xxxx or other document which reflects the
good or service of the Employer and the invoice price therefor.
(d) "Year" shall mean the period commencing on the date hereof and
ending on April 30, 1988, and each twelve (12) month period thereafter
during the term of this Employment Agreement, or if this Employment
Agreement shall terminate prior to the completion of a twelve month period,
the term "Year" shall also mean such shorter period from the preceding
April 30 through the date on which this Employment Agreement shall end.
2. Employment. The Employer hereby employs the Employee as Vice President
of Sales and Marketing of the Employer. During the term of his employment, but
subject to the provision of Paragraph 5(b) hereof, the Employee shall devote all
of his business time, attention, energies and effort to the business of the
Employer and shall use his best efforts to promote the business of the Employer,
and the Employee hereby accepts such employment and agrees to serve the Employer
in such capacity, subject to and upon the terms and conditions set forth herein.
3. Employee's Duties. The Employee shall develop and market to customers
and supervise all subordinate employees to develop and market a data base of
certain components for military, aerospace and high reliability commercial
equipment. The Employee shall abide by all rules, regulations and policies
established by the Board of Directors. The Employee shall carry out all duties
and activities assigned to him by the Board of Directors of the Employer or by
its President.
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4. Term of Employment. The Employee shall be employed hereunder for a term
commencing as of the date hereof and terminating April 30, 1992; provided,
however, that the Employee hereby is granted a single right to elect to
automatically extend the term of this Employment Agreement for one additional
period of five (5) years on the same terms and conditions contained herein, from
the period May 1, 1992 through April 30, 1997. Such election shall be exercised
by the Employee giving the Employer written notice of the Employee's decision to
so extend this Employment Agreement on a date which shall be no later than
January 31, 1992. The Employee shall only have the right to elect to extend his
term of employment if, at the time of such election and at the commencement of
the second five year term of employment hereunder, the Employee shall then be an
employee of the Employer, this Employment Agreement shall be in full force and
effect, and the Employee shall not be in default hereunder. Notwithstanding the
foregoing, this Employment Agreement and the Employee's employment hereunder
shall be subject to earlier termination pursuant to the provisions of this
Employment Agreement (said period during which the Employee is employed pursuant
to this Employment Agreement is herein referred to as the "Employment Period").
5. Employee's Compensation.
(a) The Employee shall receive as his entire compensation for all services
rendered to the Employer with respect to each Year of the Employment Period,
subject to applicable withholding for federal income tax, FICA, state and local
income taxes and other appropriate charges, the total of (i) $120,000 (the
weekly portion of such amount, being $2,307.69, shall be paid to the Employee
weekly in arrears) and (ii) an amount equal to five percent (5%) of all revenues
representing payment (or partial payment) of each Invoice Price (such revenues
being hereinafter called the "Invoice Payments") received by the Employer during
each Year or, with respect to the last Year of Employment Period, received
during or after such Year with respect to such Year, except that if any Year of
the term of this Employment Agreement shall be for less than a twelve month
period, the Employee's right to receive weekly payments of $2,307.69 referred to
in Paragraph 5(a)(i)
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hereof shall continue only so long as required by Paragraph 9 hereof. In
addition to the foregoing, the Employee's compensation shall be subject to the
following additional terms:
(I) A. The Employer and the Employee shall calculate monthly the amount
of Invoice Payments received during the month preceding the month
in which the calculation is made (the amount of each such
calculation being herein called the "Monthly Estimate"), and
during each month of the Employment Period, shall pay the
Employee an amount equal to five percent (5%) of such Monthly
Estimate.
B. The Employee shall continue to have a right to receive an amount
equal to five percent (5%) of all Invoice Payments, whenever
received by the Employer, which are based on invoices dated and
billed within the Employment Period and forwarded within such
period to customers of the Employer with respect to completed
goods and services; provided, however, for purposes of
calculating the maximum compensation to which the Employee shall
be entitled in any Year, such Invoice Payments, if received
subsequent to the last Year of the Employment Period, shall be
deemed to have been received in such last Year.
(II) A. Notwithstanding the provisions of division I of this Paragraph
5(a), the maximum compensation which the Employee may receive
under this Paragraph 5(a) with respect to any twelve month Year
shall not exceed $350,000 on an annual basis, subject only to
adjustment as otherwise set forth at Paragraph 5(a) IIC hereof.
B. In calculating the maximum compensation to which the Employee
shall be entitled in any Year less than a twelve month period,
such
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compensation shall not exceed an amount equal to the product of
$350,000 and a fraction, the numerator of which shall be the
number of days in such Year which shall be included within the
Employment Period and the denominator of which shall be 365.
C. The $350,000 annual maximum set forth in this Paragraph 5(a)II
shall be adjusted within thirty (30) days after the end of each
Year to reflect, with respect to the next succeeding Year, the
increase in the United States National Consumer Price Index, "ALL
URBAN CONSUMER'S (C.P.I. - U.) (1967-100), as compiled by the
United States Bureau of Labor Statistics for each such Year just
completed; provided, however, that in no event shall the increase
to such annual maximum exceed $10,000 for any such Year.
(ii) With respect to each annual auditing period, the certified public
accountants auditing the books and records of the Employer shall
make a final determination of the Invoice Payments received by
the Employer for such period, and the Employer and the Employee
shall make any necessary adjustment in the Employee's
compensation for such period in the event an overpayment or an
underpayment has been made to the Employee. The decisions of such
certified public accountants shall be conclusive and binding.
(b) The parties hereto acknowledge that to the date hereof the Employee has
been employed by Zeus and, although not an employee of Zeus as of the date
hereof, may hereafter be called upon to contribute additional services to Zeus.
The Employee agrees that Zeus may contract with the Employer for up to 25
percent of the Employee's time and services in or with respect to any Year
within the Employment Period. The Employee agrees to perform such services on
behalf of Zeus as shall be the subject of a separate agreement between Zeus and
Employer. Notwithstanding
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any services so rendered to Zeus, the Employer shall be solely responsible for
the payment of all compensation due to the Employee pursuant to this Employment
Agreement. The Employee shall not be entitled to any separate or additional
compensation by virtue of any services so rendered to Zeus.
(c) In addition to the compensation provided for in this Paragraph 5, the
Employee shall be entitled to be reimbursed for reasonable business expenses
necessarily incurred by him in the performance of his duties hereunder, upon
presentation of vouchers indicating the amount and business purpose of each
expenditure, with such back-up documentation as the Employer shall reasonably
require to comply with the requirements of the Internal Revenue Service
regarding substantiation of travel, entertainment and other business
expenditures. Unless such expenses have been included in a budget or budgets
previously approved by the Board of Directors of the Employer, the same shall be
subject to review and approval by the Board of Directors, which approval shall
not be unreasonably withheld or delayed.
(d) The Employee shall be eligible to participate in all pension, group
health, life insurance, hospital and medical plans and in all other employee
"fringe" benefits of the Employer which are generally provided to employees of
the Employer or to employees of Zeus (or any subsidiaries of Zeus) with
responsibilities and positions equivalent to those of the Employee. During the
term of this Employment Agreement, the Employer shall obtain and maintain for
the benefit of the Employee, insurance in the amount of $200,000 on the life of
the Employee. The Employee (or any person selected by the Employee), shall be
the owner of such policy. The foregoing provisions shall be binding on the
Employer only so long as the Employee remains insurable without any material
increase in premiums because of health related reasons of the Employee. In
addition to the foregoing, the Employer intends to develop a stock option plan
in which the Employee will be permitted to participate.
(e) Until June 30, 1990, the Employee shall be entitled to three weeks'
annual vacation with pay. From and after July 1, 1990, the Employee shall be
entitled to four weeks annual vacation with pay. Each such vacation shall be
prorated for any portion of a Year within the
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Employment Period. Such vacation shall be taken at such time or times so as not
to interfere with the Employee's duties to the Employer. The Employee shall not
be entitled to accumulate vacation from one Year to the next Year without Board
approval.
(f) The parties hereto recognize that from time to time Zeus (and any
individual, partnership, corporation, trust or other entity that directly or
indirectly, through one or more intermediaries, controls or is controlled by or
is under common control with Zeus ("control" meaning, for the purposes of this
provision, 50% or more voting control or equity) hereinafter referred to as a
"Zeus Related Person") may make loans to the Employer instead of making capital
contributions to the Employer. In such event, the Employer and the Employee
agree that any repayment of the principal of such loans (but not including a
repayment in which the funds therefor are being provided by a third party
institutional lender), to Zeus (and any and all Zeus Related Persons) will be
matched by the payment of a separate amount to the Employee, such that the ratio
of the principal amount paid to Zeus (and any and all Zeus Related Persons) and
the separate amount paid to the Employee will be in the same ratio as the stock
ownership of Zeus (and any and all Zeus Related Persons) will be matched by the
payment of a separate amount to the Employee, such that the ratio of the
principal amount paid to Zeus (and any and all Zeus Related Persons) and the
separate amount paid to the Employee will be in the same ratio as the stock
ownership of Zeus (and any and all Zeus Related Persons) in the Employer will be
to the stock ownership of the Employee in the Employer. Notwithstanding the
foregoing, any payments made to the Employee pursuant to this Paragraph 5(f)
shall not be subject to the maximum compensation limitations set forth in this
Employment Agreement, nor shall such payments be credited against other amounts
payable to the Employee pursuant to Paragraph 5(a) hereof. The foregoing
provision shall be inapplicable from and after the date at which any or all of
the shares of stock of the employer shall be registered under Section 12 or
15(d) of the Securities Exchange Act of 1934, as amended.
6. Non-Competition. The Employer and the Employee recognize and agree that
the Employee's services are special and unique, and that for these reasons a
covenant on the Employee's part not to compete anywhere in the continental
United States during the Employment Period and
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for a reasonable period after any termination of this Employment Agreement is
essential to protect the business of the Employer. The restrictions to be
imposed on the Employee pursuant to this Paragraph 6 shall not be applicable if,
and only if, the Employee's employment hereunder shall have been terminated by
the Employer "without good cause", as more particularly set forth at Paragraph
8(d) hereof. Accordingly, the Employer and the Employee agree that during the
Employment Period and (i) for a period of six months commencing immediately
after the Employment Period, in the event the Employment Period shall terminate
pursuant to Paragraph 8(a) (iii) hereof, and (ii) for a period of two years
commencing immediately after the Employment Period, in the event the Employment
Period shall terminate for any other reason (except a termination "without good
cause" as hereinabove described), the Employee will not, directly or indirectly,
including as an officer, director, employee, consultant, partner of any entity,
or as a stockholder owning more than 10% of a corporation whose shares are
publicly traded, engage in any business or solicit or accept any accounts in the
field of military electronic component service data management or in any other
field in which the Employer (Transition Analysis Component Technology, Inc.) is
actively engaged within the twelve (12) month immediately preceding the date of
termination of the Employment period.
It is recognized by the parties hereto that actual damages for breach of a
covenant of this nature are difficult if not impossible to prove with precision;
therefore, except as limited herein it is agreed that this agreement not to
compete shall be enforceable by prohibitory injunction.
7. Records. All reports, records, contracts, memoranda, correspondence,
surveys or other writings, information or data prepared, learned or discovered
by the Employee or furnished to him during the Employment Period, or during any
prior period in which he shall have been employed at Zeus, shall become and
remain the sole and exclusive property of the Employer or Zeus, as the case may
be, for all purposes and uses whatsoever. Throughout the Employment Period and
thereafter, the Employee shall not divulge, furnish or make accessible to any
third party, and shall maintain the confidentiality of, all confidential
information or proprietary property prepared, learned or discovered by him or
furnished to him during the Employment Period or during any prior period in
which he shall
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have been employed at Zeus, including, without limitation, any and all trade
secrets, customer lists, contracts, costs, sales or other financial or business
data or information.
8. Termination of Employment.
(a) The Employment Period shall terminate upon the earliest of the dates
specified below:
(i) the close of business on the date as of which the Employment
Period hereunder shall have terminated as provided in Paragraph 4
hereof;
(ii) the close of business on the date sixty (60) days after the last
day of the month in which the death of the Employee shall have
occurred;
(iii) the close of business on the date as of which the Employer shall
have given the Employee written notice of the termination of his
employment hereunder as a result of a "disability" for the required
period having occurred (as defined in Paragraph 8(b) hereof);
(iv) the close of business on the date as of which the Employee shall
terminate his employment hereunder in violation of the terms of this
Employment Agreement; or
(v) the close of business on the date as of which the Employer shall
have given the Employee written notice of the termination of his
employment for "good cause" or "without good cause" (as defined in
subparagraphs (c) and (d) of this Paragraph 8).
(b) For purposes of this Employment Agreement, the term "disability" shall
mean that by reason of a physical or mental illness which has continued for more
than six (6) consecutive months or for shorter periods which have aggregated
more than six (6) months in any consecutive
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twelve (12) month period, the Employee has been substantially unable to render
services of the character contemplated by this Employment Agreement (reasonable
vacation excepted).
(c) For purposes of this Employment Agreement, the term "good cause" shall
mean that any one of the following conditions exists or any one of the following
events has occurred: (i) continued refusal by the Employee to perform such
duties as may reasonably be delegated or assigned to him, consistent with his
position, by the Employer; (ii) substantial and continued inattention to or
continued neglect by the employee of his duties hereunder; or (iii) willful
misconduct or gross negligence, theft, fraud, embezzlement or conviction of a
felony by the Employee.
(d) Termination "without good cause" shall mean any termination of
employment under Paragraph 8(a)(v) hereof which is not a termination for good
cause, or which is not a termination as a result of the occurrence of any of the
events described at Paragraph 8(a)(i), (ii), (iii) or (iv) hereof.
9. Effect of Termination.
(a) In the event that the Employment Period is terminated for any reason
provided in Paragraph 8 hereof other than a termination without good cause, the
Employer shall only be liable for that portion of the annual gross compensation
provided for in Paragraph 5 hereof to which the Employee shall be entitled
during or with respect to the Employment Period, plus an amount equal to the
product of (i) $2,307.69 and (ii) the number of twelve month periods (or any
part of any such period) which have elapsed between July 5, 1978 and the date of
such termination.
(b) In the event that the Employment Period is terminated without good
cause, as provided in Paragraph 8(a)(v) hereof, the Employee's compensation will
continue until April 30, 1992, if such termination shall have occurred prior to
such date or April 30, 1997, if such termination shall have occurred subsequent
to April 30, 1992 and prior to April 30, 1997, provided the Employee shall have
exercised his option to renew his employment hereunder. Notwithstanding anything
herein to the contrary, any compensation otherwise payable hereunder shall cease
on the close of business
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on the date sixty (60) days after the last day of the month in which the death
of the Employee has occurred.
(c) The Employer shall pay any funds to which the Employee is entitled and
which is set forth in this Paragraph 9 to the Employee, his estate or legal
representative, as the case may be.
(d) In the event that during the Employment Period the Employee shall be
entitled to and shall actually receive disability benefits (other than those
paid for exclusively by the Employee), the benefits so received shall reduce the
compensation to be paid to the Employee pursuant to Paragraph 5 hereof to the
extent of the benefits so received.
(e) The Employee hereby consents to the Employer obtaining insurance on the
life of the Employee, the proceeds of which shall be the property of the
Employer or its designee. The Employee shall cooperate with the Employer with
respect to any examination or documentation required of the Employee with
respect to the obtaining of such insurance.
10. Arbitration.
10.1 Disputes Determined by Arbitration. Any and all disputes and
controversies arising out of or in connection with this Employment Agreement or
with respect to the construction and interpretation hereof, or concerning the
rights of any one or more parties hereto or the respective obligations of each
party hereto to each other party hereto, shall be determined by arbitration in
the County of Westchester, in accordance with and pursuant to the then existing
rules of the American Arbitration Association. The decision of a single
arbitrator chosen by said Association shall be binding upon the parties hereto
with the same force and effect as a decision or judgment of any court of
competent jurisdiction. Any party hereto shall be entitled to have a judgment
based upon the decision of said arbitrator entered by a court of competent
jurisdiction.
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10.2 Notice. Any party seeking arbitration shall serve ten (10) days'
notice by certified mail, return receipt requested, upon the other party hereto,
setting forth the difference or differences that he or it desires to arbitrate.
Any party hereto shall be entitled to compel arbitration hereunder.
10.3 Expenses. The expenses of such arbitration shall be borne equally
between or among the parties seeking the arbitration.
11. Effective Date. This Employment Agreement shall become effective as of
the date hereof and, from and after that time, shall extend to and shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto, their respective successors and assigns, executors, administrators or
other legal representatives and their respective legatees and distributees.
12. Notices. Any notice required or permitted by this Employment Agreement
shall be given by registered or certified mail, return receipt requested,
addressed to the Employer at its then principal office or to the Employee at his
residence address, or to any party hereto at such other address or addresses as
it or he may from time to time specify for the purpose in a notice similarly
given to the other party.
13. Applicable Law. This Employment Agreement is made and delivered in the
State of New York and shall be construed and enforced in accordance with the
laws of the State of New York.
14. Entire Understanding. This instrument contains the entire agreement of
the parties relating to the subject matter hereof, and there are no agreements,
representations or warranties relating to the subject matter not herein set
forth. This Employment Agreement supersedes any prior written or oral agreement
or understandings relating to the subject matter hereof. No modification of this
Employment Agreement shall be valid unless in writing and signed by the parties
hereto. A waiver of the breach of any term or condition of this Employment
Agreement shall not be deemed to constitute a waiver of any subsequent breach of
the same or any other term or condition.
15. Unenforceability. If any provision of this Employment Agreement shall
to any extent be held invalid or unenforceable, such invalidity and
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
16. Miscellaneous. The Employee warrants and represents that there is no
other agreement in force which prohibits him from entering into this Employment
Agreement or otherwise
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performing services for the Employer, or which will be violated in any way by
his entering into this Employment Agreement.
17. Employee's Auditing of Employer's Books and Records
(a) The Employer agrees to make and keep full and accurate books and
records describing all activities under this Agreement in sufficient detail to
enable all compensation payable to the Employee hereunder to be determined. In
addition, the Employer agrees to cause certified financial statements to be
prepared annually by the independent auditors of the Employer, and when
available to distribute a copy thereof to the Employee. During the Employment
Period, the Employer agrees to make available to the Employee any internal
financial statements prepared for or by the Employer.
(b) On thirty (30) days prior notice to the Employer, but not more
frequently than one time in any twelve month period, the Employee and his
certified public accountants and other auditors shall, with respect to any Year,
have limited access to such of the books and records of the Employer as shall be
reasonably necessary to determine the Employer's Invoice, Invoice Prices and
Invoice Payments for such Year, and the Employee shall have the right to make
copies therefrom at the Employee's expense. The Employee, his certified public
accountants and other auditors, but not more frequently than one time in any
twelve month period, shall have such access at all reasonable times and from
time to time during normal business hours during the term of this Agreement and
for a period of two (2) years after its expiration or termination, as the case
may be.
(c) The Employee agrees to hold confidential all information learned in the
course of any examination of the Employer's books and records hereunder, except
when it is necessary for the Employee to reveal such information in order to
enforce his rights under this Agreement, and except when compelled by law.
18. Conversion To Dollars. If any Invoice Payment is made in a currency
other than dollars, such Invoice Payment shall be converted into dollars
promptly after such Invoice Payment is received by the Employer. Payments due
and owing to the Employee pursuant to the Agreement shall be paid in dollars to
the Employee.
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IN WITNESS WHEREOF, the parties have duly executed and delivered this
Employment Agreement as of the day and year first above written.
TRANSITION ANALYSIS
COMPONENT TECHNOLOGY, INC.
ATTEST:
By:
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Employer
-----------------------------
Secretary
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Xxxxxxx Xxxx, Employee
WITNESS:
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