Exhibit 10.24
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of July 7, 1998, between BAP Acquisition
Corp., a Delaware corporation (the "CORPORATION"), and Xxxx X. Xxxxxxxx (the
"EMPLOYEE").
INTRODUCTION
The Corporation wishes to retain the services of the Employee and the
Employee wishes to be employed by the Corporation. The Employee has detailed
knowledge of various aspects of the Corporation's business and is in possession
of proprietary and confidential information concerning the business. The
disclosure of such information or the engaging in competitive activities would
cause substantial harm to the Corporation.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT. The Employee currently is employed by the Corporation
and the Employee hereby accepts his continued employment upon the terms and
conditions hereinafter set forth.
2. TERM. Unless earlier terminated in accordance with the terms hereof,
the term of this Agreement shall be for the period commencing as of the closing
of the Corporation's acquisition of the Xxxx Atlantic Paging business, and
ending September 30, 2001; PROVIDED, HOWEVER, that on September 30, 2001 and on
September 30th of each year thereafter, this Agreement shall automatically be
extended for a successive one-year period unless the Corporation or the Employee
shall have given the other written notice of its intention to terminate this
Agreement at least two (2) months prior to the anniversary date of any such
year. Such notice by the Corporation to terminate this Agreement shall be deemed
a termination without cause under Section 12 hereof. Any failure by the
Corporation or the Employee to give timely notice of termination shall cause the
term of employment of the Employee to be automatically renewed hereunder for an
additional one-year period.
3. DUTIES. The Employee shall serve as President and Chief Executive
Officer of the Corporation, in which capacities he shall be responsible for
directing the day-to-day operations of the Corporation and its subsidiaries and
such other duties consistent with such position as the Board of Directors of the
Corporation (the "BOARD") shall determine from time to time. In addition, in the
event Employee does not possess the right as a shareholder to appoint a
Director, Employee shall serve as a Director of the Corporation. Without
limiting the foregoing, the Employee shall consult with the Board with respect
to determining the Corporation's business strategies. The Employee shall receive
no additional compensation for any services rendered as a Director in the event
he is simultaneously employed by the Corporation and serving as a director of
the Corporation or any of its subsidiaries.
4. COMPENSATION.
(a) For all services rendered by the Employee pursuant to this
Agreement, during the term of this Agreement the Corporation shall pay the
Employee a salary at the annual rate of $225,000, (which amount shall
automatically increase to $250,000 when and if the Corporation's number of units
in service exceeds 300,000), which salary shall be cumulatively increased by no
less than 5% upon each anniversary date of this Agreement. Said salary may be
further increased from time to time by the Board in its sole discretion.
Payments hereunder shall be made at the same frequency as payments made to other
employees of the Corporation. In exercising such discretion, the Board of
Directors shall, not less than once each year, assess the Employee's performance
relative to performance criteria discussed by the Board with the Employee and
adopted by the Board at the beginning of such year.
(b) At any time, at the sole discretion of the Board, the Corporation
may grant to the Employee a bonus in such amount and in such form as it is
deemed appropriate, PROVIDED THAT during fiscal years 1999 and 2000 the Employee
may earn a bonus of up to seventy-five percent (75%) of his annual salary as
follows: the Employee shall be entitled to a bonus for fiscal year 1999 equal to
(i) ten percent (10%) of the amount that the Corporation's EBITDA for 1999
(calculated in accordance with GAAP and adjusted to reflect any pro-forma
acquired EBITDA as agreed by the Employee and Board of Directors) exceeds
$6,600,000 in fiscal year 1999 (the "1999 BONUS"), PROVIDED that in no event
shall the 1999 Bonus exceed seventy-five percent (75%) of the Employee's base
salary in such year. For fiscal year 2000 the Employee shall be entitled to a
bonus equal to ten percent (10%) of the amount that the Corporation's EBITDA for
2000 (calculated as set forth above) exceeds $6,600,000, less the 1999 Bonus
(the "2000 BONUS"), PROVIDED that in no event shall the 2000 Bonus exceed
seventy-five percent (75%) of the Employee's base salary in such year.
For purposes of determining the amount of the Employee's bonus, the
Corporation's EBITDA shall be as set forth in the Corporation's audited
financial statements (adjusted for acquired EBITDA).
4A. TRANSACTION FEE. In exchange for the Employee's assistance
arranging the Corporation's acquisition of Xxxx Atlantic Paging Systems (the
"ACQUISITION"), the Corporation shall pay the Employee, at the closing of the
Acquisition, in cash, a transaction fee of $225,000.
5. FULL TIME; BEST EFFORTS. During the term of this Agreement, the
Employee shall use his best efforts to promote the interests of the Corporation
and shall devote his full time and efforts to its business and affairs. The
Employee shall not engage in any other activity which could reasonably be
expected to interfere with the performance of his duties, responsibilities and
services hereunder.
6. EXPENSES. The Employee is authorized to incur reasonable expenses
for promoting the business of the Corporation, including expenses for
entertainment, travel and similar items. The Corporation will reimburse the
Employee for appropriate expenses upon the Employee's presentation of an
itemized account of such expenditures. The Corporation shall at all times retain
access to the records maintained by Employee relative to reimbursable expenses.
In recognition of Employee's need for an automobile for business purposes, the
Corporation will provide Employee with an automobile allowance equal to
$1,000.00 per month.
7. RESTRICTIVE COVENANTS. During the term of this Agreement and for a
period of one (1) year after the termination of Employee's employment with the
Corporation pursuant to the terms of this Agreement, regardless of the reason
for such termination, the Employee will not, directly or indirectly,
individually or as a consultant to, or as an officer, director, employee, equity
owner or agent of, or otherwise participate in the ownership or operation of any
business providing similar products and services as the Corporation in the
geographical areas served by the Corporation and its subsidiaries at the time of
such termination, but nothing contained herein shall be deemed to prohibit the
Employee from investing in any company engaged in such business, the stock of
which is available in a public securities market; PROVIDED, HOWEVER, that the
Employee shall not own in excess of 5% of the total issued and outstanding stock
of such company.
During the term of this Agreement and for a period of one (1) year
after the termination of such employment, regardless of the reason for such
termination, the Employee will not, directly or indirectly, solicit or endeavor
to entice away from the Corporation or any of its subsidiaries, or otherwise
materially interfere with the business relationship of the Corporation or any
subsidiary with, (I) any person who is, or was within the one (1) year period
immediately prior to the termination of the Employee's employment with the
Corporation, employed by or associated with the Corporation or any subsidiary or
(II) any person or entity who is, or was within such one (1) year period, a
customer or client of, supplier to or other party having material business
relations with the Corporation or any subsidiary.
The Employee acknowledges that a breach of any of the covenants
contained in this paragraph 7 and paragraph 7A would result in irreparable
injury to the Corporation for which there may be no adequate remedy at law and
that, in the event of an actual or threatened breach by the Employee of the
provisions of this paragraph 7 and paragraph 7A, the Corporation shall be
entitled to pursue and obtain injunctive relief restraining the Employee from
doing any act prohibited hereunder. Nothing contained herein shall be construed
as prohibiting the Corporation from pursuing any other remedies available to it
for such breach or threatened breach, including the recovery of any monetary
damages to which it would be entitled under the law. In the event that any
provision of this paragraph 7 and paragraph 7A is held to be unenforceable as a
result of it being too broad, either in terms of time or geographical extent,
the Employee agrees that the court can adapt and limit this paragraph 7 and
paragraph 7A so as to make the provisions hereof enforceable to the fullest
extent permissible.
7A. XXXX ATLANTIC TRANSACTION. In the event the Corporation fails to
consummate its acquisition of Xxxx Atlantic Paging Systems, the Employee agrees,
for a period of twelve months beginning as of the date that the Corporation
discontinues negotiations with Xxxx Atlantic Paging Systems, not to directly or
indirectly enter into any transaction relating to the acquisition of Xxxx
Atlantic Paging Systems or any part thereof; PROVIDED that, if the Corporation
fails to consummate the acquisition through no act or omission of the Employee,
this sub-section shall not apply.
8. DISCLOSURE OF INFORMATION. The Employee recognizes and acknowledges
that the Corporation's trade secrets and all other confidential and proprietary
information of a business, financial or other nature, including without
limitation, lists of the Corporation's actual and prospective customers, as they
exist from time to time (collectively, the "CONFIDENTIAL INFORMATION"), are a
valuable and unique asset of the Corporation and therefore agrees that he will
not, either during or after the term of his employment, disclose any
Confidential Information concerning the Corporation and/or its subsidiaries, to
any person,
3
firm, corporation, association or other entity, for any reason whatsoever,
unless previously authorized to do so by the Corporation's Board. It is
understood that the term "Confidential Information" shall not include any
information that has entered or enters the public domain through no fault of the
Employee. The Employee shall not make any use whatsoever, directly or
indirectly, of the Confidential Information, except as required in connection
with the performance of his duties for the Corporation. For the purpose of
enforcing this provision, the Corporation may resort to any remedy available to
it under the law.
9. MEDICAL AND VACATION BENEFITS; EQUITY. The Employee shall be
entitled to receive medical (including disability) and vacation benefits at the
expense of the Corporation, consistent with those generally available to any
other officer or employee of the Corporation.
Simultaneously with the closing of the Xxxx Atlantic Paging Systems
acquisition, the Corporation and the Employee are entering into a stock option
and restriction agreement in the form attached hereto as EXHIBIT A pursuant to
which the Corporation is granting to the Employee incentive stock options to
acquire 2,500 shares of the Corporation's common stock, such options to vest
ratably over three years and to have an exercise price per share equal to the
initial conversion price of the Corporation's Series A Convertible Preferred
Stock.
10. DISABILITY AND DEATH
(a) In the event that Employee is absent from employment by reason of
illness or other incapacity by which Employee is unable to perform the essential
functions of his position for more than six (6) consecutive months during the
term of this Agreement, the Corporation may at its option terminate this
Agreement. If the Corporation elects not to terminate, the Corporation shall be
obligated to continue to pay the Employee compensation hereunder.
(b) If the Employee dies during the term of this Agreement, the
Corporation shall pay to the Employee's estate in a lump sum within 30 days
after the date of death an amount equal to 25% of the Employee's annual salary
rate then payable to the Employee pursuant to paragraph 4 of this Agreement.
11. INSURANCE. For so long as the Employee remains employed by the
Corporation, the Corporation shall either (a) at its cost and expense maintain
term life insurance on the Employee's life in the amount of $1,000,000 so long
as such amount is obtainable, or (b) upon Employee's presentation of proof of
such expenditure, reimburse Employee for the cost and expense of such life
insurance obtained by Employee. Employee shall have the right to designate the
beneficiary of such insurance. The Employee shall cooperate with the Corporation
in maintaining such insurance policy and obtaining any key man life insurance
which the Corporation may elect to obtain for its own benefit.
12. TERMINATION. The Corporation shall have the right, on written
notice to the Employee, by action of its Board to terminate the Employee's
employment immediately at any time for cause or without cause. For purposes of
this Agreement, "CAUSE" shall mean (i) conviction of a crime involving
dishonesty or (ii) willfully engaging in conduct materially injurious to the
Corporation or (iii) the material breach of this Agreement or any other
agreement between the Employee and the Corporation, which material breach has
not been cured by Employee within ten days after Employee's receipt of written
notice from the Corporation of such material breach. In the event of termination
of employment by the Corporation pursuant to this paragraph 12 without cause,
the Corporation shall (x) continue for a period equal to the greater of (x) the
balance of the
4
original term of this Agreement (in no event to exceed one and one-half years)
or (y) one year (a) pay to Employee his salary at the then annual rate and (b)
provide to Employee the benefits under paragraphs 4, 9 and 11 of this Agreement
and (y) within 3 months of termination pay to the Employee an amount equal to
the bonus paid to the Employee in the preceding year under this Agreement.
Employee shall not be required to mitigate the amount of any payment provided
for in this paragraph 12 by seeking other employment or otherwise, nor shall the
amount of any payment or benefit provided for in this paragraph 12 be reduced by
any compensation earned by Employee as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by Employee to the Corporation or otherwise. In the event of termination of
this Agreement for any other reason (including death or disability), the
Corporation shall have no further obligation to make any payments or provide any
benefits hereunder (except, where applicable, the payments required under
paragraph 10) or under paragraph 12A below.
12A. CHANGE IN CONTROL.
(a) In the event that (i) the duties and responsibilities of Employee
are at any time significantly changed (by diminution, increase, or other
significant alteration) from the duties and responsibilities presently exercised
by him or (ii) there is a "Change in Control" (as hereinafter defined) of the
Corporation, Employee may at his election, at any time within one year after
either of such events, terminate this Agreement with 60 days prior written
notice and Employee shall be entitled to the following compensation, in lieu of
the other compensation and bonuses provided herein:
(A) In lieu of any further salary and bonus payments to
Employee for periods subsequent to the termination,
the Corporation shall pay as severance pay to
Employee, no later than the thirtieth day following
the effective date of termination, (x) a lump-sum
severance payment equal to 150% of Employee's annual
salary rate in effect as of the termination, or if
greater, such rate in effect immediately prior to the
Change in Control of the Corporation and (y) an
amount equal to 150% of his bonus for the previous
year.
(B) For a twelve (12) month period after such
termination, the Corporation shall arrange to provide
Employee with life, disability, accident and group
health insurance benefits substantially similar to
those which Employee was receiving immediately prior
to the termination. Benefits otherwise receivable by
Employee pursuant to this paragraph (B) shall be
reduced to the extent comparable benefits are
actually received by Employee during twelve (12)
month period following Employee's termination, and
any such benefits actually received by Employee shall
be reported to the Corporation.
(b) Employee shall not be required to mitigate the amount of any
payment provided for in this paragraph 12A by seeking other employment or
otherwise.
(c) For purposes of this Agreement, a "CHANGE IN CONTROL" shall be
deemed to have occurred if (i) any "person" or group of "persons" (as the term
"person" is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934) (other than persons (A) holding equity interests or (B) with whom the
Corporation has entered into definitive agreements regarding the purchase of
equity interests, as of the first day of the term of this Agreement and their
affiliates, other than the Employee) becomes the beneficial owner, directly or
5
indirectly, of securities of the Corporation representing 50% or more of the
combined voting power of the then outstanding securities of the Corporation;
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors, and any new director
whose election or nomination was approved by the directors in office who either
were directors at the beginning of the period or whose election or nomination
was previously so approved, cease for any reason to constitute at least a
majority thereof; or (iii) the stockholders of the Corporation approve a merger
or consolidation of the Corporation with any other entity, OTHER THAN a merger
or consolidation which would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Corporation or such surviving entity outstanding immediately
after such merger or consolidation, PROVIDED that if as of the first day of the
term of this Agreement the Corporation has entered into a definitive agreement
regarding a merger or consolidation of the Corporation, (A) and such merger or
consolidation of the Corporation closes within thirty (30) days of the first day
of the term of this Agreement and (B) all of the capital used to purchase Xxxx
Atlantic Paging Systems is simultaneously returned to the Corporation's
investors, any shareholder vote regarding the same shall not constitute a Change
of Control hereunder. Notwithstanding the foregoing, a "Change of Control" shall
not be deemed to have occurred and no payments shall be owed under this
paragraph 12A with respect to any merger or other transaction in which the
Corporation is acquired if the merger or transaction is approved by the Employee
in his capacity as a stockholder of the Corporation.
12B. EFFECTIVE DATE. This Agreement shall become effective as of the
date of the closing of the Xxxx Atlantic Paging Systems acquisition, PROVIDED
that the provisions set forth in paragraph 7A shall be effective as of the date
of this Agreement.
13. ENFORCEABILITY, ETC. This Agreement shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision
hereof shall be prohibited or invalid under any such law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating or nullifying the remainder of such provision or any other
provisions of this Agreement. If any one or more of the provisions contained in
this Agreement shall for any reason be held to be excessively broad as to
duration, geographical scope, activity or subject, such provisions shall be
construed by limiting and reducing it so as to be enforceable to the maximum
extent permitted by applicable law.
13A. ARBITRATION. Any and all claims arising from, or relating to, this
Agreement, its interpretation, or its alleged breach or enforcement, shall be
resolved by binding arbitration according to the rules of the American
Arbitration Association ("AAA") for commercial disputes then in effect, but
without submission to the AAA. The arbitration shall occur in New York, New York
and the parties waive any objection to this choice of alternative dispute
resolution, procedures or venue. The arbitrator shall be agreed upon by the
parties or, if no agreement can be reached within ten (10) days after either
party requests in writing the appointment of an arbitrator, the arbitrator shall
be appointed upon petition by either party to the presiding civil judge of the
applicable jurisdiction. Any arbitration hereunder shall be completed within one
hundred and twenty (120) days after appointment of an arbitrator. The arbitrator
selected to resolve the dispute shall be authorized to award reasonable
attorneys' fees and costs to the prevailing party in the arbitration, and to
include such sum in the final arbitration award. The arbitration award may be
6
confirmed as a judgment in any court having jurisdiction of the subject matter
and parties.
14. NOTICES. Any notice or other communication given pursuant to this
Agreement shall be in writing and shall be personally delivered, sent by
overnight courier or express mail, or mailed by first class certified or
registered mail, postage prepaid, return receipt requested to the parties at
their respective addresses set forth on the signature page hereof, or to such
other address as the parties shall have designated by notice to the other
parties.
15. WAIVER. The waiver by either party of a breach of any provision of
this Agreement by the other shall not operate or be construed as a waiver of any
subsequent breach.
16. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the Corporation, its successors and assigns, and the
Employee, his heirs and legal representatives.
17. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof. It may be changed
only by an agreement in writing signed by the party against whom enforcement of
any waiver, change, modification, extension or discharge is sought. This
Agreement shall be construed in accordance with and governed by the laws of the
State of New Jersey without giving effect to principles of conflicts of laws.
This Agreement may be executed in multiple counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
agreement.
* * * * * * * * * *
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BAP ACQUISITION CORP.
By:______________________________
(Title)
_________________________________
XXXX X. XXXXXXXX
Address:
_________________________________
_________________________________
7
