EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of the 5th day of
May, 2003, by and among INFINITE GROUP, INC., a Delaware corporation having its
principal place of business at 000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxx
00000 (the "Company"), and XXXXXXX X. XXXXX, an individual residing at 00
Xxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 (the "Executive").
W I T N E S S E T H
WHEREAS, the Executive is currently employed by the Company and serves as
the Company's interim President and Chief Executive Officer; and
WHEREAS, the Company, recognizing the unique skills and abilities of the
Executive, wishes to insure that the Executive will continue to be employed by
the Company; and
WHEREAS, the Executive desires to continue in the employment of the
Company as President and Chief Executive Officer of the Company; and
WHEREAS, the parties desire by this Agreement to set forth the terms and
conditions of the employment relationship between the Company and the Executive.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
in this Agreement, the Company and the Executive agree as follows:
1. Employment and Duties. The Company hereby employs the Executive as
President and Chief Executive Officer on the terms and conditions provided in
this Agreement and Executive agrees to accept such employment subject to the
terms and conditions of this Agreement. The Executive shall be responsible for
the overall management and operations of the Company, shall perform the duties
and responsibilities as are customary for the officer of a corporation in such
positions, and shall perform such other duties and responsibilities as are
reasonably determined from time to time by the Company's Board of Directors (the
"Board"). The Executive shall report to and be supervised by the Board. The
Executive shall be based at the Company's offices in Rochester, New York or such
other place which shall be within a twenty mile radius thereof that shall
constitute the Company's headquarters and, except for business travel incident
to his employment under this Agreement, the Company agrees the Executive shall
not be required to relocate. The Executive agrees to devote substantially all
his attention and time during normal business hours to the business and affairs
of the Company and to use his reasonable best efforts to perform faithfully and
efficiently the duties and responsibilities of his positions and to accomplish
the goals and objectives of the Company as may be established by the Board.
Notwithstanding the foregoing, the Executive may engage in the following
activities (and shall be entitled to retain all economic benefits thereof
including fees paid in connection therewith) as long as they do not interfere in
any material respect with the performance of the Executive's duties and
responsibilities hereunder and, with respect to subsections (i) and (ii) below,
that such activity is pre-approved by the Company's Chairman of the Board: (i)
serve on corporate, civic, religious, educational and/or charitable boards or
committees, provided that the Executive shall not serve on any board or
committee of any corporation or other business which competes with the Business
(as defined in Section 10(a) below); (ii) deliver lectures, fulfill speaking
engagements or teach on a part-time basis at educational institutions; and (iii)
make investments in businesses or enterprises and manage his personal
investments; provided that with respect to such activities Executive shall
comply with any business conduct and ethics policy applicable to employees of
the Company. The Executive shall serve as a member of the Board during the
Employment Term (as defined below).
2. Term. The term of this Agreement shall commence on May 5, 2003 (the
"Commencement Date"), and shall terminate on May 2, 2008, unless extended or
earlier terminated in accordance with the terms of this Agreement (the
"Termination Date"). Such term of employment is herein sometimes referred to as
the "Employment Term". The Employment Term shall be extended for successive one
year periods unless either party notifies the other in writing at least 180 days
before the Termination Date, or any anniversary of the Termination Date, as the
case may be, that he or it chooses not to extend the Employment Term.
3. Compensation. As compensation for performing the services required by
this Agreement, and during the term of this Agreement, the Executive shall be
compensated as follows:
(a) Base Compensation. The Company shall pay to the Executive an
annual salary ("Base Compensation") of $150,000.00, payable in equal
installments pursuant to the Company's customary payroll procedures in effect
for its executive personnel at the time of payment, but in no event less
frequently than monthly, subject to withholding for applicable federal, state,
and local income and employment related taxes. The Executive may be entitled to
such increases in Base Compensation with respect to each calendar year during
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the term of this Agreement, as shall be determined by the Company's Compensation
Committee (the "Committee"), in its sole and absolute discretion, based on an
annual review of the Executive's performance .
(b) Incentive Compensation. In addition to Base Compensation, the
Executive may be entitled to receive additional compensation ("Incentive
Compensation") in the discretion of the Committee. The Incentive Compensation
shall be pursuant to short-term and/or long-term incentive compensation and/or
bonus programs which currently exist or may be established by the Company. The
minimum executive annual bonus program is established at 30% of base
Compensation and paid annually (assuming performance criteria and goals are
met). For purposes of this Agreement, the Executive's "Pro Rata Share" of
Incentive Compensation for any calendar year of the Company shall be a fraction
whose numerator shall be equal to the number of months (or parts of months)
during which the Executive was actually employed by the Company during any such
calendar year and whose denominator shall be the total number of months in such
calendar year.
(c) Stock and Stock Options. The Executive shall receive upon the
signing of this Agreement: (i) 500,000 shares of Common Stock of the Company;
and (ii) 500,000 options granted pursuant to the Company's Employee Stock Option
Plan.
4. Employee Benefits. During the Employment Term and subject to the
limitations set forth in this Section 4, the Executive and his eligible
dependents shall have the right to participate in any retirement plans
(qualified and non-qualified), stock option plan, pension, insurance, health,
disability or other benefit plan or program that has been or is hereafter
adopted by the Company (or in which the Company participates), according to the
terms of such plan or program, on terms no less favorable than the most
favorable terms granted to senior executives of the Company.
5. Vacation and Leaves of Absence. The Executive shall be entitled to the
normal and customary amount of paid vacation provided to senior executive
officers of the Company, but in no event less than 20 days during each 12 month
period, beginning on the Commencement Date of this Agreement. The Executive may
carry over a maximum of 5 unused vacation days, out of the allotted 20 days,
from one year to the next. If during any 12-month period the executive uses 20
days of vacation, then any unused vacation shall not accrue and not carry over
to the following year. Upon any termination of this Agreement for any reason
whatsoever, accrued and unused vacation for the year in which this Agreement
terminates will be paid to the Executive within 10 days of such termination
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based on his annual rate of Base Compensation in effect on the date of such
termination. In addition, the Executive may be granted leaves of absence with or
without pay for such valid and legitimate reasons as the Company in its sole and
absolute discretion may determine, and the Executive shall be entitled to the
same sick leave and holidays provided to other senior executives of the Company.
6. Expenses.
(a) Business Expenses. The Executive shall be promptly reimbursed
against presentation of vouchers or receipts for all reasonable and necessary
expenses incurred by him in connection with the performance of his duties
hereunder.
(b) Automobile Expense. During the Employment Term, in order to
facilitate the performance of the Executive's duties hereunder, and otherwise
for the convenience of the Company, the Company shall provide the Executive with
an automobile, or shall reimburse the Executive for the cost of leasing an
automobile (provided that the lease payments with respect to such automobile
shall not exceed $500 per month) and shall pay or reimburse Executive (upon
presentation of vouchers or receipts) for the reasonable cost of all
maintenance, insurance, repairs, and other reasonable expenses related to such
automobile. If the Executive decides to utilize his own personal vehicle, the
company shall reimburse the Executive $700 per month. The Executive will then be
responsible for all costs associated with the daily operation of said vehicle,
including but not limited to: fuel costs, maintenance, insurance, etc.
(c) Life Insurance. During the Employment Term, the Company shall
pay the premiums on a $1 million term life insurance policy on the Executive
with the beneficiary of such policy designated by the Executive. This is in
addition to whatever Insurance is required by the lending institutions on the
life of the Executive.
7. Indemnification.
(a) General. The Company agrees that if the Executive is made a
party or is threatened to be made a party to any action, suit or proceeding,
whether civil, criminal, administrative or investigative (a "Proceeding"), by
reason of the fact that he is or was a director or officer of the Corporation,
or the Company, is or was serving at the request of the Company as a director,
officer, member, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including, without limitation, service
with respect to employee benefit plans, whether or not the basis of such
Proceeding is alleged action in an official capacity as a director, officer,
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member, employee or agent while serving as a director, officer, member, employee
or agent, the Executive shall be indemnified and held harmless by the Company to
the fullest extent authorized by applicable law (in accordance with the
certificate of incorporation and/or bylaws of the Company), as the same exists
or may hereafter be amended, against all Expenses (as defined below) incurred or
suffered by the Executive in connection therewith, and such indemnification
shall continue as to the Executive even if the Executive has ceased to be an
officer, director or agent, or is no longer employed by the Company and shall
inure to the benefit of his heirs, executors and administrators.
(b) Expenses. As used in this Agreement, the term "Expenses" shall
include, without limitation, damages, losses, judgments, liabilities, fines,
penalties, excise taxes, settlements and costs, attorneys' fees, accountants'
fees, and disbursements and costs of attachment or similar bonds,
investigations, and any expenses of establishing a right to indemnification
under this Agreement.
(c) Enforcement. If a claim or request under this Agreement is not
paid by the Company, or on their behalf, within fifteen days after a written
claim or request has been received by the Company, the Executive may at any time
thereafter bring suit against the Company to recover the unpaid amount of the
claim or request and if successful in whole or in part, the Executive shall be
entitled to be paid also the expenses of prosecuting such suit. The burden of
proving that the Executive is not entitled to indemnification for any reason
shall be upon the Company.
(d) Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of the Executive.
(e) Partial Indemnification. If the Executive is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of any Expenses, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify the Executive for the portion of such
Expenses to which the Executive is entitled.
(f) Advances of Expenses. Expenses incurred by the Executive in
connection with any Proceeding shall be paid by the Company in advance upon
request of the Executive that the Company pay such Expenses.
(g) Notice of Claim. The Executive shall give to the Company notice
of any claim made against his for which indemnity will or could be sought under
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this Agreement. In addition, the Executive shall give the Company such
information and cooperation as it may reasonably require and as shall be within
the Executive's power and at such times and places as are convenient for the
Executive.
(h) Defense of Claim. With respect to any Proceeding as to which the
Executive notifies the Company of the commencement thereof: (i) the Company will
be entitled to participate therein at its own expense; and (ii) except as
otherwise provided below, to the extent that it may wish, the Company jointly
with any other indemnifying party similarly notified will be entitled to assume
the defense thereof, with counsel reasonably satisfactory to the Executive. The
Company shall not be entitled to assume the defense of any action, suit or
proceeding brought by or on behalf of the Company or as to which the Executive
shall have reasonably concluded that there may be a conflict of interest between
the Company and the Executive in the conduct of the defense of such action.
The Company shall not be liable to indemnify the Executive
under this Agreement for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action or
claim in any manner which would impose any penalty or limitation on the
Executive without Executive's written consent. Neither the Company nor the
Executive shall unreasonably withhold or delay their consent to any proposed
settlement.
(i) Non-exclusivity. The right to indemnification and the payment of
expenses incurred in defending a Proceeding in advance of its final disposition
conferred in this Section 7 shall not be exclusive of any other right which the
Executive may have or hereafter may acquire under any statute, provision of the
certificate of incorporation or by-laws of the Company, agreement, vote of
stockholders or disinterested directors or otherwise.
(j) Directors and Officers Liability Policy. The Company agrees to
use reasonable efforts to maintain directors and officers liability insurance
covering the Executive in a reasonable and adequate amount determined by the
Company.
8. Termination and Termination Benefits.
(a) Termination For Cause. Notwithstanding any provision contained
herein, the Company may terminate this Agreement at any time during the
Employment Term for "Cause". For purposes of this subsection 8(a)(i), "Cause"
shall mean (1) the continuing willful failure by the Executive to substantially
perform his duties hereunder for any reason other than total or partial
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incapacity due to physical or mental illness, or (2) gross negligence or gross
malfeasance on the part of the Executive in the performance of his duties
hereunder that causes material harm to the Company. Termination pursuant to this
subsection 8(a)(i) shall be effective immediately upon giving the Executive
written notice thereof stating the reason or reasons therefor with respect to
clause (2) above, and 15 days after written notice thereof from the Company to
the Executive specifying the acts or omissions constituting the failure and
requesting that they be remedied with respect to clause (1) above, but only if
the Executive has not cured such failure within such 15 day period. In the event
of a termination pursuant to this subsection 8(a)(i), the Executive shall be
entitled to payment of his Base Compensation and the benefits pursuant to
Section 4 hereof up to the effective date of such termination and it is also the
intention and agreement of the Company that Executive shall not be deprived by
reason of termination for Cause of any payments, options or benefits which have
been vested or have been earned or to which Executive is entitled as of the
effective date of such termination.
(b) Termination due to Disability. If due to illness, physical or
mental disability, or other incapacity, the Executive shall fail, for a total of
any six consecutive months ("Disability"), to substantially perform the
principal duties required by this Agreement, the Company may terminate this
Agreement upon 30 days' written notice to the Executive. In such event, the
Executive shall be (1) paid his Base Compensation until the Termination Date and
his Pro Rata Share of any Incentive Compensation to which he would have been
entitled for the year in which such termination occurs, and (2) provided with
employee benefits pursuant to Section 4, until the Termination Date, provided,
however, that any compensation to be paid to the Executive pursuant to this
subsection 8(a)(ii) shall be offset against any payments received by the
Executive pursuant to any policy of disability insurance the premiums of which
are paid for by the Company. The Executive shall also be paid any deferred
compensation (including, without limitation, interest or other credits on the
deferred amounts) and any accrued / unused vacation pay.
(c) Termination. If at the end of the Employment Term, the Company
elects for reasons other than those outlined in paragraphs a and b above not to
extend the Employment Term as provided for in Section 2 hereof, in consideration
for the post-employment covenant against competition set forth in Section 10
hereof, the Executive shall be paid:. (i) a lump-sum payment equal to the
product of twelve times the Monthly Salary Amount in addition to his Base
Compensation at the rate in effect at the time of termination, through the
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Termination Date; provided, however, that at the sole discretion of the Company,
the Company may extend the Executive's post-employment covenant against
competition for an additional one-year period upon notice to the Executive and
the payment of a second lump sum payment equal to the product of twelve times
the Monthly Salary Amount. ; (ii) his Pro Rata Share of any Incentive
Compensation to which he would have been entitled for the year in which such
termination occurs; (iii) any deferred compensation (including, without
limitation, interest or other credits on the deferred amounts) and any accrued /
unused vacation pay; (iv) continuation until the expiration of the Employment
Term and for twelve months thereafter, of the health and welfare benefits of the
Executive and any long-term disability insurance generally provided to senior
executives of the Company (as provided for by Section 4 of this Agreement) (or
the Company shall provide the economic equivalent thereof); provided, however,
if the Executive obtains new employment and such employment makes the Executive
eligible for health and welfare or long-term disability benefits which are equal
to or greater in scope then the benefits then being offered by the Company, then
the Company shall no longer be required to provide such benefits to the
Executive; and (v) any other compensation and benefits as may be provided in
accordance with the terms and provisions of any applicable plans or programs of
the Company. As used in this Section 8(c), "Monthly Salary Amount" shall mean an
amount equal to one-twelfth of the sum of (y) the Executive's then current
annual Base Salary plus (z) the average cash incentive compensation paid to the
Executive during the three years immediately preceding the termination date.
(d) Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit the Executive's continuing or future participation in any
benefit, bonus, incentive or other plan or program provided or maintained by the
Company and for which the Executive may qualify, nor shall anything herein limit
or otherwise prejudice such rights as the Executive may have under any other
existing or future agreements with the Company. Except as otherwise expressly
provided for in this Agreement, amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plans or programs of the
Company at or subsequent to the date of termination shall be payable in
accordance with such plans or programs.
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(e) Vesting of Stock Grants and Stock Options. In the event of any
termination of this Agreement, Executive's rights with regard to any stock
grants, loan agreements or stock options shall be as set forth in the respective
agreement containing the terms and conditions pertaining thereto.
Notwithstanding the foregoing, in the event that the Executive is terminated for
reasons other than for "Cause," any stock options then held by the Executive
shall immediately vest in the Executive and shall remain exercisable for the
period specified in the grant agreement notwithstanding any provision therein to
the contrary..
(f) Certain Additional Payments by the Company. Anything in this
Agreement to the contrary notwithstanding, in the event that it shall be
determined that any payment or distribution by the Company to or for the benefit
of the Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986 or any interest or penalties with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment (an "Excise Gross-Up Payment") in an
amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any Excise
Tax imposed upon the Excise Gross-Up Payment and any ordinary income tax on the
Excise Gross-Up Payment in order to put the Executive in the same net after-tax
position as if the payment were not subject to any Excise Tax. Subject to the
provisions of this Section 8(e), all determinations required to be made
hereunder, including whether an Excise Gross-Up Payment is required and the
amount of such Excise Gross-Up Payment, shall be made by Freed, Xxxxxx &
Xxxxxxxxx, PC or such other accounting firm which at the time audits the
financial statements of the Company (the "Accounting Firm") at the sole expense
of the Company, which shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the date of termination of
the Executive's employment under this Agreement, if applicable, or such earlier
time as is requested by the Company.
If the Accounting Firm determines that no Excise Tax is payable by the
Executive, the Company shall use its reasonable best efforts to cause the
Accounting Firm to furnish the Executive with an opinion that he has substantial
authority not to report any Excise Tax on his federal income tax return. Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm
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hereunder, it is possible that Excise Gross-Up Payments, which will not have
been made by the Company, should have been made (an "Underpayment") consistent
with the calculations required to be made hereunder. If the Company exhausts its
remedies pursuant hereto and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid
by the Company to or for the benefit of the Executive.
The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Excise Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after the Executive knows of
such claim and shall apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the 30-day period following the date on
which it gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall: (i) give the Company
any information reasonably requested by the Company relating to such claim; (ii)
take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including (without limitation)
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company; (iii) cooperate with the Company in good
faith to contest effectively such claim; and (iv) permit the Company to
participate in any proceedings relating to such claim; provided that the Company
shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for any Excise
Tax or income tax, including interest and penalties with respect thereto,
imposed as a result of such representation and payment of costs and expenses.
Without limitation on the foregoing provisions hereof the Company shall control
all proceedings taken in connection with such contest and, at its sole option,
may pursue or forgo any and all administrative appeals, proceedings, hearings
and conferences with the taxing authority in respect of such claim and may, at
its sole option, either direct the Executive to pay the tax claimed and xxx for
a refund or contest the claim in any permissible manner, and the Executive
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agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine, provided that if the Company directs the
Executive to pay such claim and xxx for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax, including interest or penalties with respect thereto,
imposed with respect to such advance or with respect to any imputed income with
respect to such advance, and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
the contest shall be limited to issues with respect to which an Excise Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to settle
or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
If, after the receipt by the Executive of an amount advanced by the
Company pursuant hereto, the Executive becomes entitled to receive any refund
with respect to such claim, the Executive shall (subject to the Company's
complying with the requirements hereof) promptly pay to the Company the amount
of such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant hereto, a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of
Excise Gross-Up Payment required to be paid.
(g) Death Benefit. Notwithstanding any other provision of this
Agreement, this Agreement shall terminate on the date of the Executive's death.
In such event the Company shall continue to pay Executive's Base Compensation to
his wife, if she survives him, or, if she does not survive him, to his estate,
through the Termination Date. In addition, the Company shall pay to Executive's
wife, if she survives him, or, if she does not survive him, to his estate, the
Pro Rata Share of any Incentive Compensation to which Executive would have been
entitled for the year in which such death occurs. In addition, the Company shall
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provide the Executive's wife and/or eligible family members with health and
medical benefits pursuant to Section 4, to the extent available, through the
Termination Date.
(h) Payment.. Except as otherwise provided in this Agreement, any
payments to which the Executive shall be entitled under this Section 8,
including, without limitation, any economic equivalent of any benefit, shall be
made as promptly as possible following the date of termination. If the amount of
any payment due to the Executive cannot be finally determined within 90 days
after the Date of Termination, such amount shall be estimated on a good faith
basis by the Company and the estimated amount shall be paid no later than 90
days after such Date of Termination. As soon as practicable hereafter, the final
determination of the amount due shall be made and any adjustment requiring a
payment to or from the Executive shall be made as promptly as practicable.
(i) No Mitigation. The Executive shall not be required to mitigate
the amount of any payments provided for by this Agreement by seeking employment
or otherwise, nor shall the amount of any payment or benefit provided in this
Agreement be reduced by any compensation or benefit earned by the Executive
after termination of his employment.
9. Company Property. All advertising, promotional, sales, suppliers,
manufacturers and other materials or articles or information, including without
limitation data processing reports, customer lists, customer sales analyses,
invoices, product lists, price lists or information, samples, or any other
materials or data of any kind furnished to the Executive by the Company or
developed by the Executive on behalf of the Company or at the Company's
direction or for the Company's use or otherwise in connection with the
Executive's employment hereunder, are and shall remain the sole and confidential
property of the Company; if the Company requests the return of such materials at
any time during or at or after the termination of the Executive's employment,
the Executive shall immediately deliver the same to the Company.
10. Covenant Not To Compete.
(a) Covenants Against Competition. The Executive acknowledges that
as of the execution of this Employment Agreement (i) the Company is engaged in
the business described in its current filings with the Securities and Exchange
Commission (the "Business"); (ii) the Company's Business is conducted currently
throughout the United States and may be expanded to other locations; (iii) his
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employment with the Company will have given him access to confidential
information concerning the Company; and (iv) the agreements and covenants
contained in this Agreement are essential to protect the business and goodwill
of the Company. Accordingly, the Executive covenants and agrees as follows:
(i) Non-Compete. Without the prior written consent of the
Board of the Company, the Executive shall not during the Restricted Period (as
defined below) within the Restricted Area (as defined below) (except in the
Executive's capacity as an officer of the Company or any of its affiliates), (a)
engage or participate in the Business (or any Business which the Company may
become engaged in during the Employment Term); (b) enter the employ of, or
render any services (whether or not for a fee or other compensation) to, any
person engaged in the Business; or (c) acquire an equity interest in any such
person; provided, that the foregoing restrictions shall not apply at any time if
the Executive's employment is terminated during the Term by the Company other
than for "Cause"; provided, further, that during the Restricted Period the
Executive may own, directly or indirectly, solely as a passive investment,
securities of any company traded on any national securities exchange or on the
National Association of Securities Dealers Automated Quotation System.
As used herein, "Restricted Period" shall mean the period
commencing on the Effective Date and ending on the first anniversary of the
Executive's termination of employment; provided, however, that the Restricted
Period may be extended by the Company in its sole discretion for an additional
year upon notice to the Executive and the payment to the Executive of a second
lump sum payment as provided in Section 8(c) above.
"Restricted Area" shall mean any place within the United
States and any other country in which the Company is then actively considering
conducting Business.
(b) Confidential Information; Personal Relationships. The Executive
acknowledges that the Company has a legitimate and continuing proprietary
interest in the protection of its confidential information and has invested
substantial sums and will continue to invest substantial sums to develop,
maintain and protect confidential information. The Executive agrees that, during
and after the Restricted Period, without the prior written consent of the Board,
the Executive shall keep secret and retain in strictest confidence, and shall
not knowingly use for the benefit of himself or others all confidential matters
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relating to the Company's Business including, without limitation, operational
methods, marketing or development plans or strategies, business acquisition
plans, joint venture proposals or plans, and new personnel acquisition plans,
learned by the Executive heretofore or hereafter (such information shall be
referred to herein collectively as "Confidential Information"); provided, that
nothing in this Agreement shall prohibit the Executive from disclosing or using
any Confidential Information (A) in the performance of his duties hereunder, (B)
as required by applicable law, (C) in connection with the enforcement of his
rights under this Agreement or any other agreement with the Company, or (D) in
connection with the defense or settlement of any claim, suit or action brought
or threatened against the Executive by or in the right of the Company.
Notwithstanding any provision contained herein to the contrary, the term
Confidential Information shall not be deemed to include any general knowledge,
skills or experience acquired by the Executive or any knowledge or information
known or available to the public in general. Moreover, the Executive shall be
permitted to retain copies of, or have access to, all such Confidential
Information relating to any disagreement, dispute or litigation (pending or
threatened) involving the Executive.
(c) Employees of the Company and its Affiliates. During the
Restricted Period, without the prior written consent of the Board of the
Company, the Executive shall not, directly or indirectly, hire or solicit, or
cause others to hire or solicit, for employment by any person other than the
Company or any affiliate or successor thereof, any employee of, or person
employed within the two years preceding the Executive's hiring or solicitation
of such person by, the Company and its affiliates or successors or encourage any
such employee to leave his employment. For this purpose, any person whose
employment has been terminated involuntarily by the Company shall be excluded
from those persons protected by this Section for the benefit of the Company.
(d) Business Relationships. During the Restricted Period, the
Executive shall not, directly or indirectly, request or advise a person that has
a business relationship with the Company to curtail or cancel such person's
business relationship with the Company.
(e) Rights and Remedies Upon Breach. If the Executive breaches,
threatens to commit a breach of, any of the provisions contained in Section 10
of this Agreement (the "Restrictive Covenants"), the Company shall have the
following rights and remedies, each of which rights and remedies shall be
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independent of the others and severally enforceable, and each of which is in
addition to, and not in lieu of, any other rights and remedies available to the
Company under law or in equity.
(i) Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy to the Company.
(ii) Accounting. The right and remedy to require the Executive
to account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits derived or received by the Executive as
the result of any action constituting a breach of Restrictive Covenants.
(f) Severability of Covenants. The Executive acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in duration and
geographical scope and in all other respects. If any court determines that any
of the Restrictive Covenants, or any part thereof, is invalid or unenforceable,
the remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full effect without regard to the invalid portions. The
provisions set forth in Section 10 above shall be in addition to any other
provisions of the business conduct and ethics policy applicable to employees of
the Company and its subsidiaries during the term of Executive's employment.
(g) Saving Clause. If the period of time or the area specified in
subsection (a) above should be adjudged unreasonable in any proceeding, then the
period of time shall be reduced by such number of months or the area shall be
reduced by the elimination of such portion thereof or both so that such
restrictions may be enforced in such area and for such time as is adjudged to be
reasonable. If the Executive violates any of the restrictions contained in the
foregoing subsection (a), the restrictive period shall not run in favor of the
Executive from the time of the commencement of any such violation until such
time as such violation shall be cured by the Executive to the satisfaction of
Company.
11. Executive's Representation and Warranties. Executive represents and
warrants that he has the full right and authority to enter into this Agreement
and fully perform his obligations hereunder, that he is not subject to any
non-competition agreement other than with the Company, and that his past,
present and anticipated future activities have not and will not infringe on the
proprietary rights of others. Executive further represents and warrants that he
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is not obligated under any contract (including, but not limited to, licenses,
covenants or commitments of any nature) or other agreement or subject to any
judgment, decree or order of any court or administrative agency which would
conflict with his obligation to use his best efforts to perform his duties
hereunder or which would conflict with the Company's business and operations as
presently conducted or proposed to be conducted. Neither the execution nor
delivery of this Agreement, nor the carrying on of the Company's business as
officer and employee by Executive will conflict with or result in a breach of
the terms, conditions or provisions of or constitute a default under any
contract, covenant or instrument to which Executive is currently a party.
12. Miscellaneous.
(a) Integration; Amendment. This Agreement constitutes the entire
agreement between the parties hereto with respect to the matters set forth
herein and supersedes and renders of no force and effect all prior
understandings and agreements between the parties with respect to the matters
set forth herein. No amendments or additions to this Agreement shall be binding
unless in writing and signed by both parties.
(b) Severability. If any part of this Agreement is contrary to,
prohibited by, or deemed invalid under applicable law or regulations, such
provision shall be inapplicable and deemed omitted to the extent so contrary,
prohibited, or invalid, but the remainder of this Agreement shall not be invalid
and shall be given full force and effect so far as possible.
(c) Waivers. The failure or delay of any party at any time to
require performance by the other party of any provision of this Agreement, even
if known, shall not affect the right of such party to require performance of
that provision or to exercise any right, power, or remedy hereunder, and any
waiver by any party of any breach of any provision of this Agreement shall not
be construed as a waiver of any continuing or succeeding breach of such
provision, a waiver of the provision itself, or a waiver of any right, power, or
remedy under this Agreement. No notice to or demand on any party in any case
shall, of itself, entitle such party to other or further notice or demand in
similar or other circumstances.
(d) Power and Authority. The Company represents and warrants to the
Executive that it has the requisite corporate power to enter into this Agreement
and perform the terms hereof; that the execution, delivery and performance of
this Agreement by it has been duly authorized by all appropriate corporate
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action; and that this Agreement represents the valid and legally binding
obligation of the Company and is enforceable against it in accordance with its
terms.
(e) Burden and Benefit; Survival. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
executors, personal and legal representatives, successors and assigns. In
addition to, and not in limitation of, anything contained in this Agreement, it
is expressly understood and agreed that the Company's obligation to pay
Termination Compensation as set forth herein shall survive any termination of
this Agreement.
(f) Governing Law; Headings. This Agreement and its construction,
performance, and enforceability shall be governed by, and construed in
accordance with, the laws of the State of New York. Headings and titles herein
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.
(g) Arbitration; Remedies. Any dispute or controversy arising under
this Agreement or as a result of or in connection with Executive's employment
(other than disputes arising under Section 10) shall be arbitrated and settled
pursuant to the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association which are then in effect in a proceeding held
in Rochester, New York. This provision shall also apply to any and all claims
that may be brought under any federal or state anti-discrimination or employment
statute, rule or regulation, including, but not limited to, claims under: the
National Labor Relations Act; Title VII of the Civil Rights Act; Sections 1981
through 1988 of Title 42 of the United States Code; the Employee Retirement
Income Security Act; the Immigration Reform and Control Act; the Americans With
Disabilities Act; the Age Discrimination in Employment Act; the Fair Labor
Standards Act; the Occupational Safety and Health Act; the Family and Medical
Leave Act; and the Equal Pay Act. The decision of the arbitrator and award, if
any, is final and binding on the parties and the judgment may be entered in any
court having jurisdiction thereof. The parties will agree upon an arbitrator
from the list of labor arbitrators supplied by the American Arbitration
Association. The parties understand and agree, however, that disputes arising
under Section 10 of this Agreement may be brought in a court of law or equity
without submission to arbitration.
(h) Jurisdiction. Except as otherwise provided for herein, each of
the parties (a) submits to the exclusive jurisdiction of any state court sitting
in New York or federal court sitting in New York in any action or proceeding
arising out of or relating to this Agreement, (b) agrees that all claims in
respect of the action or proceeding may be heard and determined in any such
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court, (c) agrees not to bring any action or proceeding arising out of or
relating to this Agreement in any other court and (d) waives any right such
party may have to a trial by jury with respect to any action or proceeding
arising out of or relating to this Agreement. Each of the parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety or other security that might be required of
any other party with respect thereto. Any party may make service on another
party by sending or delivering a copy of the process to the party to be served
at the address and in the manner provided for giving of notices in Section
12(i). Nothing in this Section, however, shall affect the right of any party to
serve legal process in any other manner permitted by law.
(i) Notices. All notices called for under this Agreement shall be in
writing and shall be deemed given upon receipt if delivered personally or by
confirmed facsimile transmission and followed promptly by mail, or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at their respective addresses (or at such other address for a party as
shall be specified by like notice; provided that notices of a change of address
shall be effective only upon receipt thereof) as set forth in the preamble to
this Agreement or to any other address or addressee as any party entitled to
receive notice under this Agreement shall designate, from time to time, to
others in the manner provided in this subsection 12(i) for the service of
notices.
Any notice delivered to the party hereto to whom it is addressed
shall be deemed to have been given and received on the day it was received;
provided, however, that if such day is not a business day then the notice shall
be deemed to have been given and received on the business day next following
such day. Any notice sent by facsimile transmission shall be deemed to have been
given and received on the business day next following the day of transmission.
(j) Number of Days. In computing the number of days for purposes of
this Agreement, all days shall be counted, including Saturdays, Sundays and
holidays; provided, however, that if the final day of any time period falls on a
Saturday, Sunday or holiday on which federal banks are or may elect to be
closed, then the final day shall be deemed to be the next day which is not a
Saturday, Sunday or such holiday.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
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XXXXXXX X. XXXXX
INFINITE GROUP, INC.
By:
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