EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the 14st day of March, 1999 by and between PALLET MANAGEMENT SYSTEMS, INC., a
Florida corporation with its principal office at Xxx Xxxxx Xxxxx Xxxxxxxxx,
Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000 (the "Company"), and XXX XXXX, whose
residence address is 000 Xxxxxx Xxxxxx, Xxxxx Xxxx, Xxxxxxxx (the "Executive").
Recitals
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1. The Executive is hired as Vice President of the Finance for the
Company.
2. The Executive possesses intimate knowledge of the business and
affairs of the Company, its policies, methods and personnel.
3. The President of the Company recognizes that the Executive's
contribution, as Vice President of the Finance for the Company, to the growth
and success of the Company has been and will be substantial and desires to
assure the Company of the Executive's present and continued employment in an
executive capacity and to compensate him therefor.
4. The President has determined that this Agreement will reinforce and
encourage the Executive's continued attention and dedication to the Company.
5. The Executive is willing to make his services available to the
Company on the terms and conditions hereinafter set forth.
Agreement
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NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereby agree as follows:
1. Employment.
1.1 Employment and Term. The Company shall continue to employ the
Executive and the Executive shall continue to serve the Company, on the terms
and conditions set forth herein, for the period (the "Term") effective as of
March 14, 1999 (the "Commencement Date") and expiring on the third anniversary
of the Commencement Date, unless sooner terminated as hereinafter set forth.
1.2 Duties of Executive. The Executive shall serve as Vice President of
the Finance for the Company and shall perform the duties of an executive
commensurate with such position, shall diligently perform all services as may be
reasonably designated by the President and shall exercise such power and
authority as is necessary and customary to the performance of such duties and
services. The Executive shall devote his full time business hours to the
business and affairs of the Company.
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1.3 Place of Performance. In connection with his employment by the
Company, the Executive shall be based at the Company's principal executive
offices in Raleigh, North Carolina except for required travel on the Company's.
1.4 Relocation. If at any time the Board determines that it is in the
best interests of the Company to relocate the Company's principal executive
offices to a location other than Raleigh, North Carolina and Executive needs to
relocate to such location in order to perform his duties hereunder, then the
Company shall reimburse Executive for all out-of-pocket relocation expenses for
him and his family, including but not limited to, moving and storage expenses,
temporary living and travel expenses for a reasonable time while arranging to
move his residence to the changed location.
2. Compensation.
2.1 Base Salary. During the Term, the Executive shall receive a base
salary at the annual rate of $90,000, subject to adjustment in accordance with
this Paragraph 2.1 (the "Base Salary"). The Base Salary shall be payable in
substantially equal installments consistent with the Company's normal payroll
schedule, subject to applicable withholding and other taxes. Commencing on the
first anniversary of the Commencement Date, and each anniversary of the
Commencement Date thereafter during the Term, the Base Salary shall be
increased, but shall not be decreased, by that percentage by which the Consumer
Price Index (All Items Less Shelter), Urban Wage Earners and Clerical Workers,
for Metropolitan Areas published by the United States Government (the "Index")
for the immediately preceding calendar year exceeds such index for the next
preceding calendar year. If publication of the Index is discontinued, the
parties hereto shall accept comparable statistics on the cost of living as
computed and published by an agency of the United States government or, if no
such agency computes and publishes such statistics, by any regularly published
national periodical that does compute and publish such statistics.
2.2 Additional Cash Compensation. Executive shall be entitled to
receive a bonus calculated as follows:
(a) For the fiscal year ending June 30, 1999, Executive shall receive a
bonus equal to one eighth the percentage of Base Salary equal to the percentage
that fully diluted pre-tax earnings per share is in excess of $.20 up to 15% of
Base Salary (for example, if pre-tax earnings per share is $.25, then the bonus
would be 3.12% of Base Salary). Executive shall not be entitled to a bonus if
pre-tax earnings per share is less than $.20.
(b) For the fiscal year ending June 30, 2000 and future years, the
bonus will be equal to one quarter percentage of Base Salary equal to the
percentage increase in fully diluted pre-tax earnings per share over the prior
fiscal year up to 50% of Base Salary, provided that the base for the bonus
computation for any year cannot increase more than 100% from the prior year even
if fully diluted pre-tax earnings per share increases by more than 100% (i.e.,
if the fully diluted pre-tax earnings per share for 2000 was $.40 and for 2001
was $1.00, the base for bonus computation purposes will be $.80 or 100% of the
prior year), provided further, that if fully diluted pre-tax earnings per share
decreases from the prior year base, then no bonus is payable.
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(c) Executive's bonus shall be paid no later than ten business days
after the Company files its Annual Report on Form 10-K with the Securities and
Exchange Commission if the Company is a public company, and if not a public
company, within ten business days of the completion of its annual audit.
(d) Executive shall also be entitled to receive such additional
increments in base salary and performance or merit bonuses as shall be
determined from time to time during the Term by the Board (collectively,
"Bonus").
2.3 Stock Options. (a) At the beginning of each fiscal year commencing
with fiscal 2000, Executive shall be granted stock options under the Company's
stock option plans to purchase shares of Common Stock equal to not less than one
quarter percent (1/4%) of the shares then outstanding, with an exercise price
equal to the fair market value of the Company's Common Stock on the grant date.
The terms shall be set forth in a separate stock option agreement, but shall
provide (i) that all options shall immediately vest upon a "Change of Control"
or a termination by the Company without "Cause" (as defined herein), and (ii)
for "cashless exercise" upon exercise of the options.
(b) Effective on the Commencement Date, Executive shall be granted
15,000 Stock Appreciation Rights under the Company's stock option plan that
shall vest only upon a "Change of Control" as defined in Section 6(a) below. The
exercise price shall be the fair market value of the Company's Common Stock on
the Commencement Date.
3. Expense Reimbursement and Other Benefits.
3.1 Expense Reimbursement. During the Term, the Company, upon the
submission of supporting documentation by the Executive, and in accordance with
Company policies for its executives, shall reimburse the Executive for all
expenses actually paid or incurred by the Executive in the course of and
pursuant to the business of the Company, including expenses for travel and
entertainment.
3.2 Other Benefits. The Company shall obtain or shall continue in force
comprehensive health insurance coverage, including dental coverage, either group
or individual, for the Executive and his dependents, and shall obtain or shall
continue in force disability and life insurance for the Executive, which the
Company shall keep in effect at its sole expense throughout the Term. The life
insurance policy shall have a minimum face amount of $100,000 and the disability
insurance shall have the maximum amount obtainable and an elimination period of
not more than one year, when available. Xx. Xxxx shall have the right to name
the beneficiaries of the life insurance policy and, if he leaves the employ of
the Company for any reason, to own the policy and any benefits therefrom,
including any cash value.
3.3 Automobile Allowance. Throughout the Term of this Agreement, the
Company will pay for and provide Executive with, a monthly automobile allowance
of $500, together with reimbursement for all operating fluids used in the
automobile.
3.4 Vacation. Executive shall be entitled to reasonable vacations
during each year of the Term, the time and duration thereof to be determined by
mutual agreement between Executive and the Company.
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4. Termination.
4.1 Termination for Cause. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may be terminated by the Company for
Cause. As used in this Agreement "Cause" shall only mean (i) subject to the
following sentences, any action or omission of the Executive which constitutes a
willful and material breach of this Agreement which is not cured or as to which
diligent attempts to cure have not commenced within 20 business days after
receipt by Executive of notice of same, (ii) fraud, embezzlement or
misappropriation as against the Company, or (iii) the conviction (from which no
appeal can be taken) of Executive for any criminal act which is a felony. Upon
any termination pursuant to this Paragraph 4.1, the Company shall pay to the
Executive any unpaid Base Salary accrued through the effective date of
termination specified in such notice. In addition, the Company shall pay any
benefits, if any, owed to Executive under any plan provided for Executive under
Paragraph 3 hereof in accordance with the terms of such plan as in effect on the
date of termination of employment under this Paragraph 4.1. Except as provided
above, the Company shall have no further liability hereunder (other than for
reimbursement for reasonable business expenses incurred prior to the date of
termination, subject, however to the provisions of Paragraph 3.1 hereof).
4.2 Termination Without Cause. The Company may terminate the employment
of Executive without Cause at any time upon 30 days' prior written notice,
provided that the Company shall be obligated to pay Executive, in a lump sum on
the date of termination, all of the Base Salary compensation until the
expiration of the term of this Agreement.
4.3 Termination by Executive. Executive shall have the right to
terminate this Agreement without cause any time upon 90 days' prior written
notice, in which case this Agreement shall continue in full force and effect
until the date of termination. The Company may terminate the Executive
immediately if Executive gives written notice of a termination under this
Section. Upon a termination pursuant to this Paragraph, Executive shall only be
entitled to receive his Base Salary to the date of termination.
5. Change of Control.
(a) For the purposes of this Agreement, a "Change of Control" shall be
deemed to have taken place if: (i) any person, including a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, other than
a group whose primary persons are members of the Lucy family, becomes the owner
or beneficial owner of Company securities, after the date of this Agreement,
having 25% or more of the combined voting power of the then outstanding
securities of the Company that may be cast for the election of directors of the
Company (other than as a result of an issuance of securities initiated by the
Company, or open market purchases approved by the Board, as long as the majority
of the Board approving the purchases is the majority at the time the purchases
are made), or (ii) the persons who were directors of the Company before such
transactions shall cease to constitute a majority of the Board, or any successor
to the Company, as the direct or indirect result of or in connection with, any
cash tender or exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the foregoing transactions.
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(b) The Company and Executive hereby agree that, if Executive is
affiliated with the Company on the date on which a Change of Control occurs (the
"Change of Control Date"), the Company (or, if Executive is affiliated with a
subsidiary, the subsidiary) will continue to retain Executive and Executive will
remain affiliated with the Company (or subsidiary), for the period commencing on
the Change of Control Date and ending on the second anniversary of such date, to
exercise such authority and perform such executive duties as are commensurate
with the authority being exercised and duties being performed by the Executive
immediately prior to the Change of Control Date. If after a Change of Control
Executive is requested and, in his sole and absolute discretion, consents to
change his principal business location, the Company will reimburse the Executive
as provided in Section 1.4 hereof. If the Executive shall not consent to change
his business location, the Executive may continue to provide the services
required of him hereunder from his then residence and/or business address, and
the Company shall continue to maintain an office for Executive at that location
commensurate with the Company's office prior to the Change of Control Date.
(c) During the remaining term hereof after the Change of Control Date,
the Company (or subsidiary) will (i) continue to pay Executive at not less than
the Base Salary on the Change of Control Date, (ii) pay Executive bonuses in
amounts not less in amount than those paid during the 12 month period preceding
the Change of Control Date, and (iii) continue employee benefit programs as to
Executive at levels in effect on the Change of Control Date (but subject to such
reductions as may be required to maintain such plans in compliance with
applicable federal law regulating employee benefit programs).
(d) If during the remaining term hereof after the Change of Control
Date (i) Executive's employment is terminated by the Company (or subsidiary), or
(ii) there shall have occurred a material reduction in Executive's compensation
or employment related benefits, or a material change in Executive's status,
working conditions, management responsibilities or titles, and Executive
voluntarily terminates his relationship with the Company within 60 days of any
such occurrence, or the last in a series of occurrences, then Executive shall be
entitled to receive, a lump sum payment equal to 299% of Executive's Base
Salary. Such amount will be paid to Executive within 15 business days after his
termination of affiliation with the Company.
6. Restrictive Covenants.
6.1 Non-Competition. During the Term and for a period of two years
following the termination (other than a termination without Cause pursuant to
Paragraph 4.3) of the Executive's employment by the Company, Executive shall
not, directly or indirectly engage in or have any interest in, directly or
indirectly, any sole proprietorship, partnership, corporation, business or any
other person or entity (whether as an employee, officer, director, partner,
agent, security holder, creditor, consultant or otherwise) that, directly or
indirectly, engages primarily in the development, marketing, distribution or
sale of products and services competitive with the Company's products and
services in any and all states in which the Company conducts its business during
the Term or at the time Executive's employment with the Company is terminated
(the "Territory"); provided, however, that Executive may hold Company securities
and/or acquire, solely as an investment, shares of capital stock or other equity
securities of any such company, so long as Executive does not control acquire a
controlling interest in or become a member of a group which exercises direct or
indirect control of, more than ten percent of any class of capital stock of such
corporation.
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6.2 Nondisclosure. During the Term and following termination of the
Executive's employment with the Company, Executive shall not divulge,
communicate, use to the detriment of the Company or for the benefit of any other
person or persons, or misuse in any way, any Confidential Information (as
hereinafter defined) pertaining to the business of the Company. Any Confidential
Information or data now or hereafter acquired by the Executive with respect to
the business of the Company (which shall include, but not be limited to,
information concerning the Company's financial condition, prospects, technology,
customers, methods of doing business and marketing, distribution or sale of the
Company's products and services) shall be deemed a valuable, special and unique
asset of the Company that is received by the Executive in confidence and as a
fiduciary. For purposes of this Agreement "Confidential Information" means
information disclosed to the Executive or known by the Executive as a
consequence of or through his employment by the Company (including information
conceived, originated, discovered or developed by the Executive) prior to or
after the date hereof and not generally known or in the public domain, about the
Company or its business. Notwithstanding the foregoing, nothing herein shall be
deemed to restrict the Executive from disclosing Confidential Information to the
extent required by law, provided that prior to such disclosure, Executive shall
give the Company 15 business days' (or such shorter period as Executive has to
respond to such request) written notice.
6.3 Nonsolicitation of Employees. During the Term and for a period of
two years following termination of the Executive's employment with the Company,
Executive shall not directly or indirectly, for himself or for any other person,
firm, corporation, partnership, association or other entity, attempt to employ
or enter into any contractual arrangement with any employee or former employee
of the Company, unless such employee or former employee has not been employed by
the Company for a period in excess of six months.
6.4 Books and Records. All books, records, accounts and similar
repositories of Confidential Information of the Company, whether prepared by the
Executive or otherwise coming into the Executive's possession, shall be the
exclusive property of the Company and shall be returned immediately to the
Company on termination of this Agreement or on the Board's request at any time.
7. Injunction. It is recognized and hereby acknowledged by the parties
hereto that a breach by the Executive of any of the covenants contained in
Paragraph 6 of this Agreement will cause irreparable harm and damage to the
Company, the monetary amount of which may be virtually impossible to ascertain.
As a result, the Executive recognizes and hereby acknowledges that the Company
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and restraining any violation of any or all of the covenants contained
in Paragraph 6 of this Agreement by the Executive or any of his affiliates,
associates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other
remedies the Company may possess.
8. Consolidation, Merger or Sale of Assets. Nothing in this Agreement
shall preclude the Company from consolidating or merging into or with, or
transferring all or substantially all of its assets to, another corporation
which assumes this Agreement, and all obligations of the Company hereunder, in
writing. Upon such consolidation, merger, or transfer of assets and assumption,
the term "the Company" as used herein, shall mean such other corporation and
this Agreement shall continue in full force and effect, subject to the
provisions of Paragraph 5 hereof.
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9. Binding Effect. Except as herein otherwise provided, this Agreement
shall inure to the benefit of and shall be binding upon the parties hereto,
their personal representatives, successors, heirs and assigns.
10. Terminology. All personal pronouns used in this Agreement, whether
used in the masculine, feminine or neuter gender, shall include all other
genders; the singular shall include the plural and vice versa. Titles of
Paragraphs are for convenience only, and neither limit nor amplify the
provisions of the Agreement itself.
11. Further Assurances. At any time, and from time to time, each party
will take such action as may be reasonably requested by the other party to carry
out the intent and purposes of this Agreement.
12. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof. It
supersedes all prior negotiations, letters and understandings relating to the
subject matter hereof, including Executive's agreement dated June 30, 1995.
13. Amendment. This Agreement may not be amended, supplemented or
modified in whole or in part except by an instrument in writing signed by the
party or parties against whom enforcement of any such amendment, supplement or
modification is sought.
14. Assignment. This Agreement may not be assigned by any party hereto
without the prior written consent of the other party and except as provided in
Paragraph 8 hereof.
15. Choice of Law. This Agreement will be interpreted, construed and
enforced in accordance with the laws of the State of Florida, without giving
effect to the application of the principles pertaining to conflicts of laws.
16. Effect of Waiver. The failure of any party at any time or times to
require performance of any provision of this Agreement will in no manner affect
the right to enforce the same. The waiver by any party of any breach of any
provision of this Agreement will not be construed to be a waiver by any such
party of any succeeding breach of that provision or a waiver by such party of
any breach of any other provision.
17. Construction. The parties hereto and their respective legal counsel
participated in the preparation of this Agreement; therefore, this Agreement
shall be construed neither against nor in favor of any of the parties hereto,
but rather in accordance with the fair meaning thereof.
18. Severability. The invalidity, illegality or unenforceability of any
provision or provisions of this Agreement will not affect any other provision of
this Agreement, which will remain in full force and effect, nor will the
invalidity, illegality or unenforceability of a portion of any provision of this
Agreement affect the balance of such provision. In the event that any one or
more of the provisions contained in this Agreement or any portion thereof shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be reformed, construed and enforced as if such invalid,
illegal or unenforceable provision had never been contained herein.
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19. Enforcement. Should it become necessary for any party to institute
legal action to enforce the terms and conditions of this Agreement, the
successful party will be awarded reasonable attorneys' fees at all trial and
appellate levels, expenses and costs. Any suit, action or proceeding with
respect to this Agreement shall be brought in the courts of Palm Beach County in
the State of Florida or in the U.S. District Court for the Southern District of
Florida while the Company's executive offices are located in Boca Raton, and
thereafter in the courts of Wake County in the State of North Carolina or in the
U.S. District Court for North Carolina. The parties hereto hereby accept the
exclusive jurisdiction of those courts for the purpose of any such suit, action
or proceeding.
Venue for any such action, in addition to any other venue permitted by
statute, will be Palm Beach County, Florida or Wake County, North Carolina as
applicable. The parties hereto hereby irrevocably waive, to the fullest extent
permitted by law, any objection that any of them may now or hereafter have to
the laying of venue of any suit, action or proceeding arising out of or relating
to this Agreement or any judgment entered by any court in respect thereof
brought in Palm Beach County, Florida or Wake County, North Carolina, and hereby
further irrevocably waive any claim that any suit, action or proceeding brought
in Palm Beach County, Florida or Wake County, North Carolina, has been brought
in an inconvenient forum.
The parties hereto acknowledge and agree that any party's remedy at law
for a breach or threatened breach of any of the provisions of this Agreement
would be inadequate and such breach or threatened breach shall be per se deemed
as causing irreparable harm to such party. Therefore, in the event of such
breach or threatened breach, the parties hereto agree that, in addition to any
available remedy at law, including but not limited to monetary damages, an
aggrieved party, without posting any bond, shall be entitled to obtain, and the
offending party agrees not to oppose the aggrieved party's request for,
equitable relief in the form of specific enforcement, temporary restraining
order, temporary or permanent injunction, or any other equitable remedy that may
then be available to the aggrieved party.
20. Binding Nature. This Agreement will be binding upon and will inure
to the benefit of any successor or successors of the parties hereto.
21. No Third-Party Beneficiaries. No person shall be deemed to possess
any third-party beneficiary right pursuant to this Agreement. It is the intent
of the parties hereto that no direct benefit to any third party is intended or
implied by the execution of this Agreement.
22. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original.
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23. Notice. Any notice required or permitted to be delivered hereunder
shall be deemed to be delivered when sent by facsimile with receipt confirmed or
when deposited in the United States mail, postage prepaid, registered or
certified mail, return receipt requested, or by overnight courier, addressed to
the parties at the addresses first stated herein, or to such other address as
either party hereto shall from time to time designate to the other party by
notice in writing as provided herein.
IN WITNESS WHEREOF, this Agreement has been duly signed by the parties
hereto on the day and year first above written.
PALLET MANAGEMENT SYSTEMS, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
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XXXXXXX X. XXXXXXXXXX, President
/s/ Xxx Xxxx
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XXX XXXX, Executive
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