PALLET MANAGEMENT SYSTEMS
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
the 21st day of June, 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 XXXXXX X. XXXXXXXXX,
whose residence address is 00 X. Xxxx Xxx, Xxxxxxxxxxxx, Xxxxxxxx 00000 (the
"Executive").
Recitals
1. The Executive is hired as a Senior Vice President of the Company.
2. The Executive possesses intimate knowledge of the business and
affairs of the Company, its policies, methods and personnel.
3. The Company recognizes that the Executive's contribution, as a
Senior Vice President of 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 Company 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
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties hereby agree as follows:
1. Employment.
1.1 (a) Employment and Term. The Company shall employ the Executive and
the Executive shall serve the Company, on the terms and conditions set forth
herein, for the period (the "Initial Term") effective as of June 27, 1999 (the
"Commencement Date") and expiring on the third anniversary of the Commencement
Date, unless sooner terminated as hereinafter set forth.
(b) Renewal. This Agreement shall automatically renew for successive
annual terms of one year each (a "Renewal Term") at the conclusion of the
Initial Term, unless the Company provides the Employee written notice of its
intent not to renew at least three (3) months prior to the conclusion of each
anniversary date, commencing as of the third anniversary of the Commencement
Date. Unless used independently, the use of the word "Term" throughout the
remainder of this Agreement shall refer to both the Initial Term and the
Renewal/Remainder Terms.
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1.2 Duties of Executive. The Executive shall serve as a Senior Vice
President of 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 Company 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.
1.3 Place of Performance. In connection with his employment by the
Company, the Executive shall be based at the Company's offices in Baltimore,
Maryland except for required travel on behalf of the Company.
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 offices to a location
other than Baltimore, Maryland, and Executive needs and agrees 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 $142,500, 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, 2000 and future years, the bonus
will be equal to a percentage of Base Salary, equal to one quarter of 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 or is less than $.20 per share, then no bonus
is payable.
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(b) 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.
(c) 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 Fiscal year 2000 Executive shall be granted
10,000 ten year stock options under the Company's stock option plans to purchase
shares of Common Stock at fair market value on the date of grant. At the
beginning of each fiscal year commencing with fiscal 2001, Executive shall be
granted ten year 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
reasonable 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. The disability insurance shall have the maximum
amount obtainable and an elimination period of not more than one year, when
available.
3.3 Automobile Allowance. Throughout the Term of this Agreement, the
Company will pay for and provide Executive with, a monthly automobile allowance
of $750, of a company vehicle, 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 Disability. Notwithstanding anything to the contrary contained in
this Agreement if, during the term hereof the Executive suffers a disability (as
defined below) the Company shall continue to pay Executive the compensation
provided in Paragraph 2.1 hereof during the period of his disability; provided,
however, that, in the event Executive is disabled for a period of more than 180
days in any 12 month period (the "Disability Period"), the Company may, at its
election, by a vote of a majority of the members of the Board within 90 days
from the end of the Disability Period, and provided that disability insurance is
in effect pursuant to Section 3.2, terminate this agreement. In the event of
such termination, payment of the Executive's Base Salary at the rate prevailing
on the date of termination of the Executive and fringe benefits (to the extent
permissible by applicable law) shall be continued for a period of six months
after such termination. As used in this Agreement, the term "disability" shall
mean the complete inability of Executive to perform his duties under this
Agreement as determined by an independent physician selected with the approval
of the Company and the Executive. Except as provided above, the Company shall
have no further liability hereunder (other than for reimbursement for reasonable
business expenses incurred, stock options and bonuses accrued prior to the date
of termination subject, however, to the provisions of Paragraph 3.1 hereof).
4.3 Termination for Good Reason. The Executive may resign (and thereby
terminate his employment under this Agreement) at any time for "Good Reason" (as
defined below), upon not less than thirty (30) days' prior written notice to the
Company specifying in reasonable detail the reason therefor, provided, however,
that if the reason for resignation for "good reason" is susceptible of cure, the
Company shall have a period of thirty (30) days after such written notice to
effect a cure. For purposes of this Agreement, "Good Reason" shall mean (a) any
material failure by the Company to comply with any material obligation imposed
by this Agreement; (b) a material reduction in the Executive's title, position,
duties or responsibilities other than as a result of a material breach of this
Agreement by the Executive; (c) the Executive's assignment to an office of the
Company located other than in the Baltimore, Maryland area so that he can no
longer reasonably perform his duties for the Company while residing in the
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Xxxxxxxxx, Xxxxxxxx xxxx; (d) the Company's creation of working conditions that
a reasonable person in the Executive's position would consider unreasonable or
intolerable; [or (e) any substantial disparity between the adjustments to the
salary or any of the benefits payable to the Executive and the adjustments to
the salary or any of the benefits generally payable to the other senior
executives of the Company, other than a disparity based upon the Executive"
performance of the duties assigned to him hereunder and the compensation
policies and review standards then applied by the Company with respect to
compensation and benefits payable to the Company's senior executives.]
4.4 Termination by the Company Without Cause or by the Executive for
Good Reason. The Company may terminate the employment of Executive Without Cause
and the Executive may terminate the Agreement with Good Reason, in each case, 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 and
the Company shall maintain the Executive's health insurance on the same terms
and conditions as existed during his employment for the duration of his life and
the life of his spouse.
4.5 Termination by Executive Without Good Reason. Executive shall have
the right to terminate this Agreement without Good Reason at 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, plus
reimbursement for reasonable business expenses incurred, stock options and
bonuses accrued prior 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 40% 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.
(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).
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(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) the Executive shall have terminated this Agreement for "good reason" as
defined above, or (iii) 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 [100]% of
Executive's Base Salary and the Company shall maintain the Executive's health
insurance on the same terms and conditions as existed during his employment for
the duration of his life and life of this spouse. 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 4.4) of the Executive's employment from 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 five 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.
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 Company and Xxxx Xxxxxxxxx recognize that the
laws and public policies of the various states of the United States may differ
as to the validity and enforceability of certain of the provisions contained
herein. It is the intention of the Company and Xxxx Xxxxxxxxx that the
provisions of this Agreement shall be enforced to the fullest extent permissible
under the laws and public policies of each state and jurisdiction in which such
enforcement is sought, but that the unenforceability (or the modification to
conform with such laws or public policies) of any provision hereof shall not
render unenforceable or impair the remainder of this Agreement. Accordingly, if
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any provision of this Agreement shall be deemed to be invalid or unenforceable,
either in whole or in part, this Agreement shall be deemed to delete or modify,
as necessary, the offending provision and to alter the balance of this Agreement
in order to render the same valid and enforceable to the fullest extent
permissible as aforesaid.
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 the city/county
where Employee resided during employment hereunder or any other state where
jurisdiction or venue over the Employee exists. The parties hereto hereby accept
the exclusive jurisdiction of those courts for the purpose of any such suit,
action or proceeding.
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 shall be entitled to seek 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.
23. Notice. Any notice required or permitted to be delivered hereunder
shall be deemed to be delivered when delivered by 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.
[SIGNATURES ON NEXT PAGE]
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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/ Xxxx X. Xxxx, III
------------------------------------
Xxxx X. Lucy III, Chairman and
Chief Executive Officer
/s/ Xxxxxx X. Xxxxxxxxx
-------------------------------
XXXXXX X. XXXXXXXXX, Executive
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