EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of the 1st day of July, 1999 (the
"AGREEMENT"), by and between Infinite Technology Group, Inc., a New York
corporation having its principal office at 00 Xxxxxxx Xxxxxxxx, Xxxxxxx, XX
00000 (the "COMPANY"), and Xxxx Xxxxxxx (the "EXECUTIVE").
R E C I T A L S:
The Company desires to employ the Executive, and the Executive desires
to accept such employment by the Company, upon the terms and conditions
hereinafter set forth.
In consideration of the mutual covenants and agreements set forth
herein, the parties agree as follows:
1. Employment and Duties. The Company agrees to employ the Executive as
the Chairman of the Board of the Company and the Executive accepts such
employment and agrees to perform all duties and services consistent with the
Executive's position. The Executive shall be the highest ranking official of the
Company and shall hold the highest executive authority within the Company;
provided, however, that Xxxxx XxXxxxx, President and Chief Executive Officer of
the Company shall be considered to hold an office of rank and authority equal to
that held by the Executive. The Executive agrees to devote substantially all of
the Executive's business time, attention and energy to perform the Executive's
duties and services hereunder; provided, however, that the Executive may conduct
other projects which do not detract a significant amount of the Executive's time
and attention from his duties and services hereunder. The Executive shall not be
required to perform his duties hereunder at a location other than at the
Company's corporate headquarters, which shall be located in the Counties of
Nassau or Suffolk, in the State of New York, except for reasonable travel which
may be required of the Executive.
The Company agrees that it shall nominate the Executive to be a
director of the Company at each election of directors of the Company to be held
during the Employment Period (as defined below), and to recommend to the
shareholders of the Company to vote their shares in favor of the election of the
Executive as a director of the Company at all such meetings. The Executive
agrees to serve as a director of the Company for no additional consideration,
except as may be provided to all directors generally.
2. Term of Employment. This Agreement shall commence on the date hereof
and end on the fifth anniversary of the date hereof, unless sooner terminated as
provided in Section 5 hereof, and subject to extension as hereinafter provided
(the "EMPLOYMENT PERIOD"). At the expiration of the initial five (5) year
Employment Period, and any extension thereof, the Employment Period shall
automatically be extended, without any action on the part of the Company or the
Executive for an additional period of one (1) year, unless the Company or the
Executive shall have submitted a written notice on non-extension to the other
party not less than six (6) months prior to the expiration of the then scheduled
Employment Period.
3. Compensation and Benefits.
3.1 Base Salary. The Company shall pay the Executive a base salary
of Two Hundred Fifty Thousand ($250,000) Dollars per annum ("BASE SALARY"). The
Base Salary for each year after the first year may be increased from time to
time in the sole discretion of the Compensation Committee of the Board of
Directors of the Company and in any event will be increased annually to reflect
corresponding increases in the United States Department of Labor, Bureau of
Labor Statistics, Consumer Price Index, All Urban Consumers, United States City
Average. The Base Salary shall be payable at such intervals as salaries are paid
by the Company to its other executive employees.
3.2 Cash Bonuses and Stock Option Grants. In addition to the Base
Salary, with respect to each fiscal year during the Employment Period, the
Company shall compensate the Executive with cash bonuses and stock option grants
in amounts to be determined by the Compensation Committee of the Board of
Directors of the Company, in its sole discretion, based upon, among other
things, the growth of the Company through acquisitions, the Company's economic
performance and, if the Company's Common Stock is publicly traded, increases in
the market price of the Company's Common Stock.
3.3 Benefit Plans. During the Employment Period, the Executive shall
be entitled to participate in all plans adopted for the general benefit of the
Company's employees or executive employees, such as pension plans, medical
plans, investment plans and group or other insurance plans and benefits, to the
extent that the Executive is and remains eligible to participate therein and
subject to the eligibility provisions of such plans in effect from time to time.
The Executive shall be reimbursed for his reasonable out-of-pocket expenses
incurred in the performance of his duties upon submission of appropriate
evidence thereof in conformity with normal Company policy.
3.4 Automobile. The Company shall lease a luxury automobile for the
exclusive use and benefit of the Executive. The automobile shall be of a type
similar to the automobile currently leased by the Company for the benefit of the
Executive. The lease shall contain a clause allowing the Executive to purchase
the automobile at the termination of the term of the lease.
3.5 Indemnification. The Company hereby agrees to indemnify and hold
harmless the Executive to the full extent permitted by the New York Business
Corporation Law and other relevant statutes. The Company agrees to advance to
the Executive, as and when incurred by the Executive, all costs and expenses
arising from any claim as to which the Company is providing indemnification
hereunder.
-2-
4. Vacation. For each year during the Employment Agreement, the
Executive shall be entitled to paid vacation in accordance with the Company's
standard policy, but in no event shall the Executive be entitled to less than
four (4) weeks vacation per annum.
5. Termination.
5.1 Death. This Agreement shall automatically terminate upon the
death of the Executive, whereupon the Company shall be obligated to pay to the
Executive's estate any unpaid Base Salary through the date of death and Bonus,
if any, as determined by the Board of Directors. Amounts payable under this
Section 5.1 shall be payable at the times and intervals set forth in Sections
3.1 and 3.2 hereof.
5.2 Disability. The Company shall have the right to terminate this
Agreement during the continuance of any Disability of the Executive, as
hereafter defined, upon fifteen (15) days' prior notice to the Executive during
the continuance of the Disability. "Disability" for purposes of this Section 5.2
shall mean an inability by the Executive to perform a substantial por tion of
the Executive's duties hereunder by reason of physical or mental incapacity or
disability for a total of one hundred eighty (180) days or more in any
consecutive period of three hundred and sixty-five (365) days, as determined by
the Board of Directors in its good faith judgment. In the event of a termination
by reason of the Executive's Disability, the Company shall be obligated to pay
the Executive any unpaid Base Salary through the date of termination, and Bonus,
if any, as determined by the Board of Directors. Amounts payable under this
Section 5.2 shall be payable at the times and intervals set forth in Sections
3.1 and 3.2 hereof.
5.3 Termination by the Company for Due Cause. Nothing herein shall
prevent the Company from terminating Executive's employment for Due Cause.
Executive shall continue to receive salary for the period ending with the date
of such termination as provided in this Section 5.3. Any rights and benefits he
may have in respect of any other compensation or employee benefit plans or
programs of the Company shall be determined in accordance with the terms of such
other compensation arrangements or such other plans or programs.
The term "Due Cause", as used herein, shall mean that (a) the
Executive has committed a willful, serious act, such as embezzlement, against
the Company intending to enrich himself at the expense of the Company or (b) the
Executive, in carrying out his duties hereunder, has been guilty of willful,
gross negligence resulting in either case in material harm to the Company (this
provision shall not apply to any particular instance which is merely the result
of any good faith error in judgment), (c) the willful and continued failure by
Executive to substantially perform his duties with the Company (other than any
such failure resulting from Executive's incapacity due to physical or mental
illness), after a demand for substantial performance is delivered to Executive
by the Board which specifically identifies the manner in which the Board
believes that Executive has not substantially performed his duties, or (d) the
willful engaging by Executive in gross misconduct materially and demonstrably
injurious to the Company. For purposes of this paragraph, no act, or failure to
act, on Executive's part shall be
-3-
considered "willful" unless done, or omitted to be done, by Executive, not in
good faith and without reasonable belief that Executive's action or omission was
in the best interest of the Company.
Notwithstanding the foregoing, Executive shall not be deemed to have
been terminated for Due Cause unless and until there shall have been delivered
to him a copy of a resolution duly adopted by the affirmative vote of not less
than two-thirds (2/3) of the entire membership of the Board at a meeting of the
Board called and held for the purpose (after reasonable notice to Executive and
an opportunity for Executive, together with his counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, Executive was
guilty of conduct set forth above and specifying the particulars thereof in
detail.
5.4 Termination by the Company other than for Due Cause. The
foregoing notwithstanding, the Company may terminate the Executive's employment
for whatever reason it deems appropriate, provided, however, that in the event
such termination is not due to permanent disability as provided in Section 5.2,
or based on Due Cause as provided in Section 5.3, the Executive will continue to
receive his Base Salary as provided in Section 3 for the remaining Term of the
Agreement (as it may be extended), but in no event for more than thirty-five
(35) months or less than twenty-four (24) months from the date of such
termination. During the period of salary continuation hereunder, the Executive
will be entitled to continued benefit coverage and benefit credits as provided
in Section 3 hereof or the economic equivalent. Any such benefit coverage, or
economic equivalent thereto, will be offset by comparable coverage provided to
the Executive in connection with any subsequent employment.
5.5 Termination by the Executive for Good Reason. Executive may
terminate his employment under this Agreement for Good Reason in which event the
Company shall still have the same obligations to Executive under this Agreement
as provided for in Section 5.4.
(a) "Good Reason" shall mean:
(i) Without Executive's express written consent, the
assignment to Executive of any duties
inconsistent with his positions, duties,
responsibilities and status with the Company or
a change in his reporting responsibilities,
title or offices, or any removal of Executive
from or any failure to re-elect him to any of
such positions, except in connection with the
termination of his employment for Due Cause,
Disability or Retirement or as a result of his
death, or by Executive other than for Good
Reason;
(ii) A reduction in Executive's Base Salary or
benefits or a breach of the Company's
obligations undertaken in this Agreement;
-4-
(iii) In the event of the occurrence of a Change in
Control, this Agreement may be terminated by
Executive upon the occurrence thereafter of one
or more of the following events (in addition to
those enumerated above):
(A) Any failure to elect or re-elect
Executive, or removal of Executive, as a
director of the Company (or any successor
thereto), if Executive shall have been a
director of the Company immediately prior
to the Change in Control, or the office of
the Company which Executive held
immediately prior to a Change in Control;
(B) A significant adverse change in the nature
or scope of the authorities, powers,
functions, responsibilities or duties
attached to the position with the Company
which Executive had immediately prior to
the Change in Control, or the termination
of Executive's rights to any Benefits to
which he was entitled immediately prior to
the Change in Control or a reduction in
scope or value thereof without the prior
written consent of Executive, any of which
is not remedied with ten (10) calendar
days after receipt by the Company of
written notice from Executive of such
change, reduction or termination, as the
case may be;
(C) A determination by Executive made in good
faith that as a result of a Change in
Control and a change in circumstances
thereafter significantly affecting his
position, he has been rendered
substantially unable to carry out, or has
been substantially hindered in the
performance of, any of the authorities,
powers, functions, responsibilities or
duties attached to his position
immediately prior to the Change in
Control, which situation is not remedied
within ten (10) calendar days after
receipt by the Company of written notice
from Executive of such determination;
(D) The liquidation, dissolution, merger,
consolidation or reorganization of the
Company or transfer of all or a
significant portion of its business and/or
assets unless the successor or successors
(by liquidation,
-5-
merger, consolidation, reorganization or
otherwise) to which all or a significant
portion of its business and/or assets have
been transferred (directly or by operation
of law) shall have assumed all duties and
obligations of the Company under this
Agreement hereof; or
(E) The Company shall relocate its principal
executive offices or require Executive to
have as his principal location of work any
location which is in excess of 100 miles
from the location thereof immediately
prior to the Termination Date or to travel
away from his office in the course of
discharging his responsibilities or duties
hereunder more than thirty (30)
consecutive calendar days or an aggregate
of more than sixty (60) calendar days in
any consecutive 365-calendar day period
without in either case his prior consent.
(iv) Executive is not elected a director or
appointed Chairman of the Board of the
Company.
(b) Change in Control. For purposes of this Agreement, a
"Change in Control" shall have occurred if at any time during the term (as that
term is hereafter defined), any of the following events shall occur:
(i) The Company is merged, or consolidated, or
reorganized into or with another corporation or
other legal person, and as a result of such
merger, consolidation or reorganization less
than 51% of the combined voting power of the
then- outstanding securities of such corporation
or person immediately after such transaction are
held in the aggregate by the holders of voting
securities of the Company immediately prior to
such transaction;
(ii) The Company sells all or substantially all of
its assets to any other corporation or other
legal person and thereafter, less than 51% of
the combined voting power of the then-
outstanding voting securities of the acquiring
or consolidated entity, which are held in the
aggregate by the holders of voting securities of
the Company immediately prior to such sale;
-6-
(iii) There is a report filed after the date of this
Agreement on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as
promulgated pursuant to the Securities Exchange
Act of 1934 (the "Exchange Act") disclosing that
any person (as the term "person" is used in
Section 13(d)(3) or Section 14(d)(2) of the
Exchange Act) has become the beneficial owner
(as the term "beneficial owner" is defined under
Rule 13 d-3 or any successor rule or regulation
promulgated under the Exchange Act) representing
25% or more of the combined voting power of the
then-outstanding voting securities of the
Company;
(iv) The Company shall file a report or proxy
statement with the Securities and Exchange
Commission pursuant to the Exchange Act
disclosing in response to Item 1 of Form 8-K
thereunder or Item 5(f) of Schedule 14A
thereunder (or any successor schedule, form or
report or item therein) that the change in
control of the Company has or may have occurred
or will or may occur in the future pursuant to
any then-existing contract or transaction; or
(v) During any period of two consecutive years,
individuals who at the beginning of any such
period constitute the directors of the Company
cease for any reason to constitute at least a
majority thereof, unless the election or the
nomination for election by the Company's
shareholders of each director of the Company
first elected during such period was approved by
a vote of at least two-thirds of the directors
of the Company then still in office who were
directors of the Company at the beginning of
such period.
5.6 Notice of Termination. Any Notice of Termination by the Company
pursuant to Section 5.4 or by Executive pursuant to Section 5.5 shall be
communicated by written Notice of Termination to the other party hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision so
indicated.
5.7 Date of Termination. "Date of Termination" shall mean:
(a) If Executive's employment is terminated pursuant to Section
5.5, the date specified in the Notice of Termination, and
-7-
(b) If Executive's employment is terminated for any other
reason, the date on which a Notice of Termination is given; provided that if
within thirty (30) days after any Notice of Termination is given, one party
notifies the other party that a dispute exists concerning the termination, the
Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding and
final arbitration award or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal thereof having expired and no appeal
having been perfected).
6. Restrictions.
6.1 Confidentiality.
(a) The Executive recognizes that the Executive's position with
the Company is one of trust and confidence. The Executive acknowledges that,
during the course of the Executive's employment with the Company, the Executive
will necessarily become acquainted with confidential information relating to the
customers (including names, addresses and telephone numbers) of the Company, and
trade secrets, processes, methods of operation and other information, which the
Company regards as confidential and in the nature of trade secrets (collectively
"Confidential Information"). The Executive acknowledges and agrees that the
Confidential Information is of incalculable value to the Company and that the
Company would suffer damage if any of the Confidential Information was
improperly disclosed.
(b) The Executive covenants and agrees that the Executive will
not, at any time during or after the termination of the Executive's relationship
with the Company, reveal, divulge, or make known to any person, firm or
corporation, any Confidential Information made known to the Executive or of
which the Executive has become aware, regardless of whether developed, prepared,
devised or otherwise created in whole or in part by the efforts of the
Executive, except and to the extent that such disclosure is necessary to carry
out the Executive's duties for the Company. The Executive further covenants and
agrees that the Executive shall retain all Confidential Information in trust for
the sole benefit of the Company, and will not divulge or deliver or show any
Confidential Information to any unauthorized person including, without
limitation, any other employer of the Executive, and the Executive will not make
use thereof in an independent business related to the business of the Company.
6.2 Non-Competition. The Company is in the business of developing,
marketing, licensing and supporting network software and hardware products and
also provides consulting and services in network security, network design,
Internet solutions, troubleshooting and integration (the "BUSINESS"). Executive
acknowledges and recognizes that the Business has been conducted, and sales of
its products have been made, throughout the United States, and Executive further
acknowledges and recognizes the highly competitive nature of the industry in
which the Business is involved. Accordingly, in consideration of the premises
contained herein, the consideration to be received hereunder, stock options to
be granted Executive, Executive shall not, during the Non-Competition Period (as
defined below): (i) directly or indirectly engage,
-8-
whether or not such engagement shall be as a partner, stockholder, affiliate or
other participant, in any Competitive Business (as defined below), or represent
in any way any Competitive Business, whether or not such engagement or
representation shall be for profit providing services to customers of the
Company or its affiliates; (ii) interfere with, disrupt or attempt to disrupt
the relationship, contractual or otherwise, between the Company and any other
person or entity, including, without limitation, any customer, supplier,
employee or consultant of the Company; (iii) induce any employee of the Company
to terminate his employment with the Company or to engage in any Competitive
Business in any manner described in the foregoing clause (i) (as well as an
officer or director of any Competitive Business); or (iv) affirmatively assist
or induce any other person or entity to engage in any Competitive Business in
any manner described in the foregoing clause (i) (as well as an officer or
director of any Competitive Business). Anything contained in this Section 6.2 to
the contrary notwithstanding, an investment by Executive in any publicly-traded
company in which Executive and his affiliates exercise no operational or
strategic control and which constitutes less than 5% of the capital of such
entity shall not constitute a breach of this Section 6.2.
As used herein, "Non-Competition Period" shall mean the period
commencing on the date hereof and terminating on the Termination Date; provided,
however, that if the Term of Employment shall have been terminated by the
Company, pursuant to Section 5.3, or by the Executive other than pursuant to
Section 5.5, then "Non-Competition Period" shall mean the period commencing on
the date hereof and ending on the first anniversary of the Termination Date.
"Competitive Business" shall mean any business in any State of the United States
in any line of business in which the Company or Subsidiary was engaged or had a
formal plan to enter as of the Termination Date.
Executive understands that the foregoing restrictions may
limit his ability to earn a livelihood in a business similar to the business of
the Company, but he nevertheless believes that he has received and will receive
sufficient consideration and other benefits as an employee of the Company and as
otherwise provided hereunder and pursuant to other agreements between the
Company and Executive to justify clearly such restrictions which, in any event
(given his education, skills and ability), Executive does not believe would
prevent him from earning a living.
If at any time the provisions of this Section 6 shall be
determined to be invalid or unenforceable, by reason of being vague or
unreasonable as to area, duration or scope of activity, this Section 6 shall be
considered divisible and shall become and be immediately amended to only such
area, duration and scope of activity as shall be determined to be reasonable and
enforceable by the court or other body having jurisdiction over the matter; and
the Executive agrees that this Section 6 as so amended shall be valid and
binding as though any invalid or unenforceable provision had not been included
herein.
7. Enforcement. The Executive acknowledges that the Company will suffer
substantial and irreparable damages not readily ascertainable or compensable in
terms of money in the event of the breach of any of the Executive's obligations
under Section 6 and hereof. The
-9-
Executive therefore agrees that the provisions of Section 6 shall be construed
as an agreement independent of the other provisions of this Agreement and any
other agreement and that the Company, in addition to any other remedies
(including damages) provided by law, shall have the right and remedy to have
such provisions specifically enforced by any court having equity jurisdiction
thereof. The rights and remedies set forth in this Section 7 shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Company under law or equity.
8. Miscellaneous Provisions.
8.1 Entire Agreement. This Agreement sets forth the entire agreement
and understanding between the parties with respect to the subject matter hereof
and supersedes all prior agreements, arrangements, and understandings between
the parties with respect to the subject matter hereof.
8.2 Modification. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms or covenants hereof may
be waived, only by a written instrument executed by both of the parties or in
the case of a waiver, by the party waiving compliance.
8.3 Waiver. The failure of either party at any time or times to
require performance of any provision hereof in no manner shall affect the right
at a later time to enforce the same. No waiver by either party of a breach of
any term or covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be or construed as a
further or continuing waiver of any such breach or a waiver of any other term or
covenant contained in this Agreement.
8.4 Notices. All notices, demands, consents or other communications
hereunder shall be in writing and shall be given (and shall be deemed to have
been duly given) upon the earlier of receipt, one business day after being sent
by telecopier or three business days after being sent by registered or certified
mail: (i) if to the Company, at the address first set forth above, (ii) if to
the Executive, at the home address of Executive as set forth on the payroll
records of the Company, or in either case, to such other address as either party
shall hereafter specify by notice to the other party. Copies of all notices
given pursuant to this paragraph shall be simultaneously sent to Xxxxx X.
Xxxxxx, Esq., c/o Xxxxxx Xxxxxx Xxxxxx & Xxxx, 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000. Irrespective of the foregoing, notice of change of address
shall be effective only upon receipt.
8.5 Governing Law. This Agreement shall be construed in accordance
with and governed by the laws of the State of New York applicable to contracts
made and to be performed wholly within such state.
8.6 Arbitration. Any controversy or claim arising out of or relating
to this Agreement, the making, interpretation or the breach thereof, other than
a claim solely for
-10-
injunctive relief for any alleged breach of the provisions of Section 6 as to
which the parties shall have the right to apply for specific performance to any
court having equity jurisdiction, shall be resolved by arbitration in New York,
New York in accordance with the Commercial Arbitration Rules of the American
Arbitration Association and judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof and any party to the
arbitration may, if such party so elects, institute proceedings in any court
having jurisdiction for the specific performance of any such award. The powers
for the arbitrator or arbitrators shall include, but not be limited to, the
awarding of injunctive relief. The arbitrator shall include in any award in the
prevailing party's favor the amount of his or its reasonable attorney's fees and
expenses and all other reasonable costs and expenses of the arbitration. In the
event the arbitrator does not rule in favor of the prevailing party in respect
of all the claims alleged by such party, the arbitrator shall include in any
award in favor of the prevailing party the amount of his or its reasonable costs
and expenses of the arbitration as he deems just and equitable under the
circumstances. Except as provided above, each party shall bear his or its own
attorney's fees and expenses and the parties shall bear equally all other costs
and expenses of the arbitration.
8.7 Assignability. This Agreement, and the Executive's rights and
obligations hereunder, may not be assigned by the Executive. The Company may
assign its rights, together with its obligations hereunder, only to a successor
by merger or by the purchase of all or substantially all of the assets and
business of the Company and such rights and obligations shall inure to, and be
binding upon, any such successor.
8.8 Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective legal representatives,
heirs, permitted successors and permitted assigns.
8.9 Headings and Word Meanings. Headings and titles in this
Agreement are for convenience of reference only and shall not control the
construction or interpretation of any provisions hereof. The words "herein,"
"hereof," "hereunder" and words of similar import, when used anywhere in this
Agreement, refer to this Agreement as a whole and not merely to a subdivision in
which such words appear, unless the context otherwise requires. The singular
shall include the plural unless the context otherwise requires.
8.10 Separability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
-11-
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first above written.
INFINITE TECHNOLOGY GROUP LTD.
By: /s/ Xxxxx XxXxxxx
--------------------------------
Name: Xxxxx XxXxxxx
Title: President and Chief Executive Officer
/s/ Xxxx Xxxxxxx
--------------------------------
Xxxx Xxxxxxx
-12-
