EXECUTIVE EMPLOYMENT AGREEMENT
CHIEF FINANCIAL OFFICER
THIS AGREEMENT made and entered into at Beachwood, Ohio on this 16th day of
July, 1998, by and between FIX-CORP INTERNATIONAL, INC., a duly organized and
existing Delaware corporation having a usual place of business in Beachwood,
Ohio (hereinafter referred to as the "Company"), and XXXXX XXXXXXXXX, whose
address is 000 X. Xxxxxxxxxxx Xxxxxx, Xxxxxx, Xxxx 00000 (hereinafter referred
to as the "Executive").
WITNESSETH:
WHEREAS, Fix-Corp desires to employ Executive as the Chief Financial
Officer of the Company and Executive desires to accept such position
and employment pursuant to the terms and conditions hereinafter set
forth.
WHEREAS, the continued availability of Executive's services is
regarded by the Company as important to its continued corporate growth
and success, and Executive desires to formalize his employment with
the Company.
NOW THEREFORE, in consideration of the mutual promises hereinafter set
forth, the parties hereto agree as follows:
1. EMPLOYMENT AND DUTIES. The Company hereby employs the Executive in
the capacity of Chief Financial Officer and to perform such other duties
consistent with his executive status, as may be determined and assigned to
him by the Company's Chief Executive Officer ("CEO"), President and/or Board
of Directors of the Company.
2. PERFORMANCE. Executive agrees to devote all of his time and efforts
to the performance of his duties as Chief Financial Officer of the Company
and to the performance of such other duties consistent with his executive
status as are assigned to him from time to time by the CEO, President or by
the Directors of the Company. During said employment, Executive agrees not to
engage in any other business activity, whether or not said activity is
pursued for gain, profit. or other pecuniary advantage(s), without first
obtaining written consent from the Company's President or CEO; provided,
however, that subject to the provisions as set forth hereinafter, nothing
contained in this Agreement shall be construed as preventing Executive from
investing his assets in such form or manner as will not require any services
on his part in operation of the affairs of the business organization in which
such investments are made. Executive will devote his best efforts to the
needs of the Company and its subsidiaries and affiliates, and shall not allow
his investing activities to materially interfere with his duties to Company-
The Executive may have reasonable time off to attend professional courses and
programs necessary to maintain his license and/or registration as a certified
public accountant in Ohio.
In addition to the foregoing, Executive further agrees that (i) he will
be loyal to the Company and its subsidiaries and affiliates, (ii) he will not
disclose to competitors information, financial or otherwise, confidential to
the Company and its subsidiaries and affiliates; and, (iii) he will use his
best efforts to promote the business of the Company and its subsidiaries and
affiliates.
3. TERM. Except in the case of earlier termination, as hereinafter
specifically provided, the term of this contract shall be. for five (5)
years, commencing on July 16, 1998. This Agreement shall be automatically
renewed for a successive five (5) year term (the "Renewal Term") unless
either party gives notice of its intention no to renew by delivering written
notice to the other party not less than 90 days prior to the expiration of
the existing term.
4. COMPENSATION. For all the services to be rendered by Executive in
any capacity hereunder including services as Chief Financial Officer, or any
other duties assigned to him by the CEO, President or by the Directors of the
Company, the Company agrees to pay Executive as follows:
(a) During the Employment Period an annual base salary of One Hundred
Twenty-Five Thousand Dollars ($125,000.00), plus such increases as the Board
of Directors of the Company, in its sole discretion, may grant from time to
time, which salary shall be payable in accordance with customary Company
policies and practices. Executive shall also be entitled to participate in
any annual bonus plan established by the Board of Directors of the Company;
provided, however, that the foregoing shall not be construed to guarantee a
bonus to the Executive or the establishment of such plan.
(b) If Fix Corp elects to cancel this Agreement prior to the end of the
Employment Period, or if this Agreement is renewed, Fix Corp elects to cancel
this Agreement prior to the end of the Renewal Term, voluntarily and without
cause, then the Executive is entitled to receive a total of One Hundred
Twenty-Five Thousand Dollars ($125,000.00) in severance benefits, payable in
a lump sum less payroll taxes within thirty (30) days after the effective
date of such termination. Any such termination of this Agreement by Fix-Corp
shall also terminate services being provided by the Executive to the
Company's subsidiaries and affiliates.
5. INSURANCE. (a) The Company, at its expense, shall provide Executive
with family coverage in the medical and hospitalization insurance program
offered by the Company. The Company, at its expense, shall also provide
Executive with disability income insurance protection and any group life
insurance that is provided for any other executive or principals of the
Company.
(b) The Company shall also provide and pay for life insurance on the
life of the Executive for Two Hundred Fifty Thousand Dollars ($250,000.00)
provided the Executive is insurable at reasonable rates. The Executive
represents he is in good health and has no pre-
2
existing health conditions which would preclude the Company obtaining such
insurance at reasonable prevailing rates. If the Executive is not insurable
at reasonable rates, then the Company shall not be obligated to provide such
insurance coverage. The beneficiary of such policy shall be the Executive's
spouse or such other person(s) as the Executive shall designate in writing to
the insurance company. The owner of the policy shall be the Company.
(c) Executive agrees that the Company, in its discretion, may apply for
and procure in its own name and for its own benefit, life insurance in any
amount or amounts considered advisable; and that he shall have no right,
title or interest therein; and further, agrees to submit to any medical or
other examination and to execute and deliver any application or other
instrument in writing, reasonably necessary to effectuate such insurance.
6. PENSION AND PROFIT SHARING. The Company shall include Executive in
all Company pension and profit-sharing plans in a comparable manner as
provided for its other executives.
7. MISCELLANEOUS BENEFITS. The Company agrees to provide Executive
with the following benefits at its sole expense:
(a) An automobile allowance of Five Hundred Dollars ($500.00) per month.
(b) Professional dues and program costs for all professional
organization memberships and continuing educational programs deemed
reasonably necessary by Executive to maintain his professional standing as a
certified public accountant and as Chief Financial Officer of the Company.
(c) Sick leave benefits as are granted pursuant to Company policy.
(d) Vacation benefits as follows: Executive shall be entitled during
each 12 month period of this Agreement to a vacation of four (4) weeks,
during which time the Executive's compensation shall continue to be paid. The
Executive shall schedule all such vacation time with Fix-Corp's CEO and
President at least two (2) weeks in advance of the time sought for such
vacation(s). The length of time of such vacation(s) and the accessibility of
the Executive during such vacation(s) must be commercially reasonable such
that the Executive shall not be unavailable to perform his duties for
unreasonable lengths of time. Vacation time shall not accumulate from year to
year and any unused vacation time which shall remain at the end of each 12
month period of employment beginning with the execution date of this
Agreement shall be paid to the Executive at the end of each 12 month period
on a per diem rate upon his yearly compensation as set forth in Section 4
above.
(e) All expenses, including meals, lodging, transportation and
miscellaneous, for business and related travel which are approved in advance
by the President and/or CEO of the Company and excepting those expenses
associated with the automobile allowance being received by the Executive as
described in Section 7(a) above. The Company agrees to reimburse the
Executive for said travel expenses upon written request.
3
(f) Disability benefits, to include payment to Executive of the
periodic salary installments as stated above, for a period no more than
twelve (12) months from the date of disability rendering the Executive unable
to perform his normal duties as Chief Financial Officer of the Company.
(g) Executive shall receive an incentive stock option to purchase five
hundred thousand (500,000) shares (the "Shares") of restricted, unregistered
stock of Fix-Corp International, Inc. at market price as of the close of the
exchange on July 16, 1998. These incentive stock options are not vested. On
July 16, 1999 (1st anniversary of date of grant), an option to purchase
100,000 (ie. 20%) shares will become vested. The remaining incentive stock
options will vest at the rate of 100,000 shares on each anniversary date
thereafter (ie. July 16, 2000; July 16, 2001; July 16, 2002; and July 16,
2003). No further vesting of shares shall occur on or after the date either
party gives notice of termination of the employment of the Executive for
whatever reason(s). The vested option(s) may be exercised by the Executive at
any time during the Employment Period or Renewal Term if the Agreement has
been renewed, by written notice given by certified mail return receipt
requested to the Executive to the Company's President and/or CEO. This option
is not assignable by the Executive. If the Executive's employment with the
Company is terminated pursuant to Section 4(b), then the Executive's option
to purchase the Shares shall terminate within ninety (90) days after the
Executive receives written notice that his employment with the Company is
being terminated. In the event that the Executive's employment is terminated
with cause as hereinafter defined and/or voluntarily by the Executive, then
the Executive's option to purchase the Shares as set forth above shall
terminate effective on the earlier of the date he is terminated, or the date
he received written notice of his termination, or the date upon which the act
or omission giving rise to Executive's termination for cause occurred. The
Shares referred to above resulting from exercise of the Executive's option
being acquired by the Executive pursuant to this Agreement will be acquired
solely by and for the account of the Executive for investment and said shares
are not being acquired for resale or distribution. The Company expressly
acknowledges, and the Executive so agrees, that the shares are not registered
under Federal securities laws and under the law of any state, are not to be
registered as part of this Agreement and may not be sold without registration
under any applicable Federal or state securities laws and said shares will be
a legend so stating.
8. CONFIDENTIAL INFORMATION. Executive covenants and agrees with the
Company that he will not either during the term of his employment, or at any
time thereafter, disclose to anyone any confidential information concerning
the business, financial affairs, operations, research, patents, processes or
products of the Company and its subsidiaries and affiliates, or any other
knowledge or information which would not have been accessible to Executive
other than through his employment with the Company and its subsidiaries and
affiliates. In relation to all such confidential information, the Executive
shall not publish, disclose, or make accessible to any other person or entity
either during or after the termination of his employment and Executive
represents and warrants that he will only use such information during his
employment with the Company and then only for the benefit of the Company and
its subsidiaries and affiliates. Upon request at any time, Executive shall
deliver to the Company all tangible evidence of such confidential information
and documentation prior to or at the termination of his employment.
4
Executive agrees that he will promptly disclose to the Company any and
all improvements, discoveries, ideas or inventions composing proprietary
intellectual property which may be material to the operations and business of
the Company (the "Improvements") which Improvements are made or conceived by
Executive, acting alone or in conjunction with others, either (a) during the
Employment Period, or (b) within three (3) years after the Employment Period
if such Improvements result from or were suggested by such employment.
Executive shall not disclose any such Improvements to any person except the
Company, and shall provide the Company written documentation of such
Improvements. Executive agrees that, at the request of the Company, Executive
will execute such applications, statements, assignments or other documents,
furnish such information and data and take all such other action (including
without limitation the giving of testimony) as the Company may from time to
time reasonably request in order to obtain for the Company a registration or
patent in the United State or any foreign county covering or pertaining to
any such Improvement.
9. NONCOMPETITION COVENANT. The Executive acknowledges that his
services and responsibilities are of particular significance to the Company
and that his position with the Company does and will continue to give him an
intimate knowledge of its business, business plans and finances. Because of
this, it is important to the Company that the Executive be restricted from
competing with the Company in the event of the termination of his employment.
The parties hereto further acknowledge and agree that the business of Company
and the sale of its goods and services is national and international in
scope. Based thereon, the Executive agrees that during the term of his
employment and during the period of three (3) years following the termination
of such employment, however terminated, whether voluntary or involuntary,
whether with cause or without cause, or whether by reason of the expiration
of the term of this agreement and whether or not his employment shall then be
covered by this agreement or an extension thereof, he will not, either as an
individual on his own account or as a partner, employee, agent, executive or
employee of any other person, firm, association, corporation, or any other
business entity, either directly or indirectly, within the United States or
any foreign country in which the Company and/or its subsidiaries and/or
affiliates is/are then doing business, do any of the following:
(a) directly or indirectly, without the prior written consent of the
Company, enter into or engage generally in any business which manufacturers,
sells or distributes any products in competition with the business of the
Company or its affiliates in those geographical areas in which the Company
conducts or has conducted such business during the Employment Period; and/or,
(b) convert to Executive's own use or the use of others, or memorize
for the purpose for converting to Executive's own use or to the use of
others, customers lists, customer leads and customer files belonging to and
in the possession of the Company; and/or,
(c) solicit, either directly or indirectly, any of the customers or
customer leads of the Company, confidential knowledge of which was obtained
by Executive's employment with the Company; and/or,
5
(d) solicit, either directly or indirectly, any of the employees, staff
or officers of Company for the purpose of offering said employees, staff or
officers employment outside the Company whether such employment be a business
competitive with that of the Company or otherwise; and/or,
(e) make disclosure to any other person or entity of confidential
information acquired from the Company, including, but not limited to, the
names and addresses of the Company's customers, clients and accounts,
customer leads, the names and addresses of suppliers and financial
institutions and lenders doing business with the Company, policies and
procedures and methods developed for the operation of the Company, including
advertising techniques, accounting methods, manufacturing information,
techniques, processes and secrets, personnel procedures and the names and
addresses of all company employees, processes and research and development
being used and conducted by the Company, and all other policies and
procedures and processes utilized in the daily operation and success of the
Company's business; and/or,
(f) make disclosure to any person or entity of any confidential
information acquired by the Executive relating to the Company's business
and/or business expansion plan(s), finances, financial status, operating
and/or manufacturing processes and techniques, research and development,
solvency, banking relationships, and any other information acquired by the
Executive which would not have otherwise been disclosed to him had he not
been employed by the Company.
For purposes of this Section 9., any person, firm, association or
corporation that has a relationship with the Company and which shall have
been terminated prior to the date of the termination of employment of
Executive as a result of any direct or indirect activities on the part of
Executive calculated to divert or to entice business, opportunities or
patronage away from the Company shall be considered to have continued as such
customer as of the date of the termination of Executive's agreement.
The aforesaid covenants as contained in the terms and provisions of this
Section 9. entered into by and between Company and Executive represent the
essence of this agreement and they shall be construed as independent on any
other provisions of this agreement. The existence of any claim or cause of
action of the Executive against the Company, whether predicated on this
agreement or otherwise, shall not constitute a defense to the enforcement by
Employer of these covenants.
Recognizing the irreparable nature of the injury that could result from
Executive's violation of the provisions of this Section 9. of this agreement,
and that damages would be inadequate compensation, it is agreed by and
between the parties hereto that any violation by Executive of the provisions
of this Section 9. of this agreement shall be the proper subject for
immediate injunctive and other equitable relief to the Company in any Court
of competent jurisdiction. Executive further agrees to communicate the
content of this Section 9. to any prospective employer, entity or associate
of his engaged in a business competitive to the business
6
of the Company and for whom the Executive intends to render services within
three (3) years after termination of his employment with the Company.
Executive agrees and acknowledges that the restrictions contained in
this contract are reasonable and necessary in order to preserve and protect
the Company's legitimate interests, and further that any violation of the
terms and conditions of this Section 9. will result in irreparable injury for
which the Company would have adequate remedy at law.
10. REPRESENTATIONS OF EMPLOYEE. Executive represents and warrants to
the Company that he is under no contractual or other restriction or
obligation which is inconsistent with the execution of this Agreement, the
performance of his duties hereunder, or the other rights of the Company or
its subsidiaries or affiliates hereunder and Executive is under no physical
or mental disability that would hinder his performance of duties under this
Agreement. Executive further represents that he is not subject to any
judgment or decree, the effect of which would prohibit, limit or otherwise
restrict the employment of the Executive by the Company pursuant to the terms
of this Agreement as well as the use by the Executive of his skills,
expertise and knowledge.
11. ASSIGNMENT. This Agreement may be assigned by the Company in the
event of a merger, consolidation and/or sale of its assets, and the rights
and obligations of the Company under this agreement shall inure to the
benefit of and shall be binding upon the Company's successors and assigns.
The Executive further agrees that the terms and conditions of this Agreement
shall be enforceable against the Executive by any successor or assigns of the
Company, whether such succession or assignment results from the merger and/or
consolidation of the Company or the sale of the Company's assets to any
purchaser.
12. DELETED
13. TERMINATION FOR CAUSE. Notwithstanding any other provision of this
Agreement, Executive's employment may be terminated immediately by the
Company at any time for cause. Cause shall exist if (i) Executive shall be
convicted of a crime, (ii) Executive shall commit any act or omit to take any
action negligently or in bad faith and to the detriment of the Company,
and/or its subsidiaries, affiliates and/or employees, including but not
limited to unauthorized disclosures of confidential information of the
Company and/or its subsidiaries' or affiliates, or (iii) Executive commits
acts of self dealing, or (iv) Executive shall breach any term of this
Agreement and fail to correct such breach within ten (10) days after
commission of the same, then, and in each such case, the Company shall have
the right to give notice of termination of Executive's services hereunder as
of a date (not earlier than ten (10) days from such notice) to be specified
in such notice and this Agreement shall terminate on the date so specified.
Any termination under this Section 13. shall be deemed to be with cause and
the severance provisions of Section 4(b) of this Agreement shall not apply to
such termination regardless of whether the Company fully complies with the
notice provisions set forth above.
In the event of Executive's termination of this employment for any
reason, Executive agrees that he, or in the event of his incapacity or death,
his legal representatives will
7
immediately surrender to the Company in good condition all monies, motor
vehicles, merchandise, account books, memorandum, records, tools, keys and
other property, of whatsoever nature, tangible or intangible, which are in
his possession and which belong to or may reasonably be considered to relate
to or be, in any way, connected with the business of the Company. In the
event that said items are not so returned, the Company shall have the right
to recover said property and to deduct any compensation due and payable to
Executive, the reasonable value of said items plus all proper and reasonable
costs and expenses incurred in searching for, taking and removing and
recovering said property. In the event that said items are returned in
damaged condition or in other than in good and operable condition, reasonable
wear and tear excepted, the Company shall have the right to deduct from any
compensation due and payable to Executive, the reasonable value of repairing
and/or replacing said items.
14. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and if sent by certified or
registered mail to his residence at 000 X. Xxxxxxxxxxx Xxxxxx, Xxxxxx, Xxxx
00000 in the case of Executive, or to the Company at 0000 X. Xxxxx Xxxx,
Xxxxx 000, Xxxxxxxxx, Xxxx 00000 in the case of Fix-Corp.
15. WAIVER. The waiver by either party of a breach of any provision of
this agreement shall not operate or be construed as a waiver of any
subsequent breach of this agreement.
16. MISCELLANEOUS. Should any part of this contract for any reason be
declared invalid, such shall not affect the validity of any remaining portion
hereof, which remaining portion shall continue in force and effect as if this
contract had been executed with such invalid portion eliminated, and it is
hereby declared the intention of the parties hereof that they would have
executed the remaining portion of this contract without including any such
part, parts or portion which may for any reason be hereafter declared invalid.
This agreement supersedes any and all prior written or oral agreements
between the Executive and the Company and this agreement may not be changed
except by a writing executed by each party hereto. This agreement is executed
and delivered in Beachwood, Ohio and shall be construed and enforced in
accordance with the laws and decisions of the state of Ohio. In the event of
any litigation at any time arising hereunder it is specifically agreed among
the parties that the sole and exclusive jurisdiction and venue for such
litigation shall be Cuyahoga County, Ohio, except that in the event the
Company seeks to enforce the provisions of Section 9. of this Agreement
through injunctive relief, jurisdiction and venue as to such injunctive
relief and any damages associated with the breach of this agreement shall be
proper in any Court of competent jurisdiction.
The covenants, agreements, representations, and warranties contained in
or made pursuant to this Agreement shall survive Executive's termination of
employment.
8
IN WITNESS WHEREOF, the parties hereto have signed this agreement as a
sealed instrument in the day and year first above written.
FIX-CORP INTERNATIONAL, INC. EXECUTIVE:
By: /s/ Xxxx XxXxxxxxxxxx By: /s/ Xxxxx X. Xxxxxxxxx
--------------------------------- --------------------------------
Xxxx XxXxxxxxxxxx, President Xxxxx Xxxxxxxxx
By: /s/ Xxxx Xxxxxx
---------------------------------
Xxxx Xxxxxx, Chairman & CEO