Exhibit 10.3
EMPLOYMENT AGREEMENT
AGREEMENT dated September 15, 1999, by and between Enterprises
Solutions Inc., a Florida corporation ("Company"), and Xxxx X. Xxxxxxx
("Employee").
WHEREAS, the Company is engaged in the business of developing and
operating internet and computer security solutions, government and corporate
systems integration and contract selling and development work;
WHEREAS, the Company and the Employee wish to enter into an Employment
Agreement in order to retain Employee's ongoing services as the President and
Chief Executive of the Company or in such capacities as the Company's Board from
time to time determines;
WHEREAS, Employee is employed by the company in a confidential
relationship wherein Employee, in the course of his employment with the Company,
will become familiar with and aware of information as to the specific manner of
doing business and the customers of and its afflilates and future plans with
respect thereto, all of which will be maintained at great expense to the
Company; this information is a trade secret and constitutes the valuable
goodwill of the Company.
WHEREAS, employee recognizes that the Company's business is dependent
upon a number of trade secrets, including locations, trade contacts, supplies,
techniques, methods and data. The protection of the trade secrets is of critical
importance to the successful operation of the Company;
WHEREAS, the Company will sustain great loss and damage if during the
terms of this Agreement or Employee's employment with the Company, or for a
period of one (1) year immediately following the termination of the Agreement or
Employee's employment, for whatever reason, Employee should violate the
provisions of Articles III or IV of this Agreement. Further, monetary damages
for such losses would be extremely difficult to measure.
NOW, THEREFORE, in consideration of the mutual promises, terms,
covenants and conditions set forth herein and the performance of each, it is
hereby agreed as follows:
ARTICLE I
Employment and Duties
A. The Company hereby employs Employee as its President and Chief Executive
Officer. Additional or different duties, titles or positions, however,
may be assigned to Employee or may be taken from Employee from time to
time by the Board of Directors ("Board") of the Company. Employee hereby
accepts this employment upon the terms and conditions herein contained
and agrees to devote his time, attention and efforts to promote and
further the business and services of the Company. Employee shall
faithfully adhere to, execute and fulfill all policies established by the
Company.
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B. Employee shall perform such duties, assume such responsibilities and
devote such time, attention and energy to the business of the Company as
the Board shall from time to time require and shall not, during the term
of his employment hereunder, be engaged in any other business activity
pursued for gain, profit or other pecuniary advantage if such activity
interferes with Employee's duties and responsibilities hereunder.
However, the foregoing limitations shall not be construed as prohibiting
Employee from making personal investments in such form or manner as will
neither require his services in the operation or affairs of the companies
or enterprises in which such investments are made nor violate the terms
of Paragraphs 3 or 4 hereof.
C. All funds received by Employee on behalf of the Company, if any, shall be
held in trust for the Company and shall be delivered to the Company as
soon as practicable.
ARTICLE II
Compensation
2.01 Salary. From and after the effective date of this Agreement, the Employee
shall receive a salary ("Salary") from the Company in an amount equal to
$200,000.00 per year.
The Employee's Salary shall be payable pursuant to a monthly schedule consisting
of semimonthly payments ("Salary"), each such payment being in an amount equal
to 1/72 of $600,000.00 or $8,333.33, Once the Company first receives funding in
the amount of $10MM dollars, the Employee's Salary shall be increased to an
amount equal to $500,000 per year minimum or set to equal the industry standard
for other such executives in a similar size and scope as the Company, whichever
is greater. All other conditions in Paragraph 2.01 and elsewhere in this
agreement shall be adjusted to take into account the Employee's increased
salary.
2.02 Expense Reimbursement. The Company shall reimburse Employee for all
reasonable travel, entertainment and other expenses related to his employment by
or promotion of the Company. Employee shall provide a written accounting and
receipt of all expenses for which reimbursement is sought on a monthly basis and
the Company shall reimburse all such expenses within ten (10) days following
receipt of each written accounting.
2.03 Bonuses. The Employee shall be entitled to receive such bonuses as the
Board shall determine om time to time in accordance with Company policy and at
the sole discretion of the Board, but not less than 7% of the Net Before Tax
corporate profits in each year of employment.
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2.04 Plan Participation. The Employee shall be entitled to participate in any
and all stock option, stock bonus, pension, profit sharing, retirement or other
similar plans adopted by the Company.
2.05 Other. The Employee shall be entitled to such fringe benefits as the
Company shall establish for its employees generally which shall include with
respect to the Employee at least four weeks paid vacation annually, (family)
medical, life and disability insurance, disability pay, automobile and such
other benefits as the Company shall adopt, subject to the discretion of the
Company to add or delete such standard benefits as the Board deems appropriate,
from time to time. During the term of his employment, Employee shall be entitled
to borrow from the Company up to $750,000 on a secured basis. Any loan(s) taken
by Employee pursuant to this provision shall bear simple interest at the
annualized rate of 7%. Employee shall pay to the Company all accrued interest on
a monthly basis. Employee's monthly interest payment shall be determined based
on the applicable interest rate applied against the then current principal
amount of the loan outstanding. Employee shall repay the principal amount of any
loan(s) taken pursuant to this provision not later than ten (1O) years after
receiving his first distribution of loan proceeds. As security for any loan(s)
taken by Employee, Employee agrees to pledge to the Company that amount of the
Company's stock owned by Employee representing 125% of the outstanding balance
of any and all loans taken by Employee. The amount of stock to be pledged by
Employee shall be adjusted monthly and shall be based on the closing bid price
of the Company's stock on the first trading day of each month. Employee shall be
entitled to receive one or more loans from the Company, however, the cumulative
principal amounts of all loans taken shall not exceed $750,000.
2.06 Stock Compensation. The Employee shall be entitled to receive in the form
of Common Stock of the Company shares in the amount of 225,000, shares, which
shall be held in escrow by the Company, with 1/3rd being released to the
Employee at the end of each year of employment completion. The right to the
first 1/3rd of Common Stock shall vest upon execution of this contract and shall
be issued to Employee on or before December 31, 1999. The employee shall receive
275,000 additional shares, which shall be earned at such time as his salary is
increased pursuant to paragraph 2.01 above.
During the period of any restriction on Employee's ability to transfer the
Company's stock issued to Employee pursuant to this Agreement, Company agrees
that it shall reacquire from Employee, at current market prices, that number of
shares of such stock as is necessary for Employee to satisfy his tax
obligations, if any, resulting from the Company's issuance of stock to Employee.
In the event the Employee's employment by the Company is terminated on or before
September 14, 2002 or following a "change in control of the Company", as defined
in section 5.02E below, any stock bonus provided for above shall be deemed to be
earned in full and shall be paid by the Company simultaneously with such change
in control.
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ARTICLE III
Non-Competition Agreement
A. Employee will not, during the period of this Agreement or of his
employment by or with the Company, and for a period of one (1) year
immediately following the termination of this Agreement or his
employment, whichever is longer, for any reason whatsoever, directly or
indirectly, for himself or on behalf of or in conjunction with any other
person, persons, company, partnership, corporation or business of
whatever nature (i) call upon any customer of the Company (including, but
not limited to, any customer obtained for the Company by Employee) for
the purpose of soliciting or selling any products or services in
competition with those of the Company or its affiliates; (ii) call upon
any employee of the Company or any of its affiliates for the purpose or
with the intent of enticing them away from or out of the employ of the
Company or any reason whatever; (iii) establish, enter it, be employed by
or, advise, consult with or become a part of, any company, partnership,
corporation or other business entity or venture, or in any way engage in
business for himself or for others, in competition with the Company or
its affiliates within one hundred (100) miles of the home office (of the
Company and/or any affiliated company location, such location having a
permanent and known facility wherein the Employee has served in any
capacity and wherever Employee has performed duties or had management
responsibility on behalf of the Company or its affiliates; or (iv) during
or after the term of his employment with the Company, disclose the
Company's customers or any other trade secrets of the Company whether in
existence or proposed, to any person, firm partnership, corporation or
business for any reason or purpose whatsoever.
B. Because of the difficulty of measuring economic losses to the Company and
its affiliates as a result of his breach of the foregoing covenant and
because of the immediate and irreparable damage that would be caused to
the Company and its affiliates for which it would have no other adequate
remedy, Employee agrees that the foregoing covenant may be enforced by
the Company and its affiliates in the event of breach by him by
injunctions and restraining orders.
C. It is agreed by the parties that the foregoing covenants in this
Paragraph 3 are necessary to protect the goodwill and business interests
of the Company and its affiliates and impose a reasonable restraint on
Employee in light of the activities and business of the Company and its
affiliates on the date of the execution of this Agreement and the future
plans of the Company; but it is also the intent of the Company and
Employee that such covenants be construed and enforced in accordance with
the activities and business of the Company and its affiliates on the date
of the termination of the employment of the Employee.
D. The covenants in this Paragraph 3 are severable and separate and the
unenforceability of any specific covenant shall not affect the provisions
of any other covenant. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or territorial
restriction set forth are unreasonable, then it is the intention of the
parties that such restrictions be enforced to the fullest extent which
the court deems reasonable and the Agreement shall thereby be reformed.
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E. All of the covenants in this Paragraph 3 shall be construed as an
agreement independent of any other provision in this Agreement and the
existence of any claim or cause of action of Employee against the Company
or its affiliates, whether predicated in this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Company of such
covenants. It is specifically agreed that the period of one (1) year
stated at the beginning of this Paragraph 3, during which the agreements
and covenants of Employee made in this Paragraph 3 shall be effective,
shall be computed by excluding from such computation any time during
which Employee is in violation of any provision of this Paragraph 3 and
any time during which there is pending in any court of competent
jurisdiction any action (including any appeal from any final judgment)
brought by any person, whether or not a party to this Agreement, in which
action the Company or its affiliates seeks to enforce the agreements and
covenants of Employee or in which any person contests the validity of
such agreements and covenants or their unenforceability or seeks to avoid
their performance or enforcement
ARTICLE IV
Non-Disclosure Agreement and Proprietary Information.
A. The Employee recognizes and acknowledges that the information,
techniques, processes, formulas, developments, experimental work, work in
progress, business, list of the Company's customers and any other trade
secret or other secret or confidential information relating to Company's
business as they may exist from time to time are valuable, special and
unique assets of Company's business. In addition, Employee recognizes
that Company is continually engaged in research and development of new
inventions and improvements to the information, techniques, processes,
formulas, developments, trade secrets, and other secrets and confidential
matters relating to Company's business. Therefore, Employee agrees as
follows:
1. That Employee will hold in strictest confidence and not disclose,
reproduce, publish or use in any manner, whether during or subsequent to
his employment, without the express authorization of the Board of
Directors of the Company, any information, manufacturing technique,
process, business customer lists, trade secrets or any other secrets or
confidential matter relating to any aspect of the Company's business as
designated from time to time by the Board of Directors of Company, except
as such disclosure or use may be required in connection with Employee's
work for the Company.
2. That upon request or at the time of leaving the employ of the Company,
the Employee will deliver to the Company, and not keep or deliver to
anyone else, any and all notes, memoranda, documents and, in general, any
and all material relating to the Company's business.
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3. That the Board of Directors of the Company may from time to time
designate other subject matters requiring confidentiality and secrecy
which shall be deemed to be covered by the terms of this Agreement.
B. In the event of a breach or threatened breach by the Employee of the
provisions of this Paragraph 4, the Company shall be entitled to an
injunction:
1. Restraining the Employee from disclosing, in whole or in part, any
information as described above or from rendering any services to any
person, firm, corporation association or other entity to whom such
information, in whole or in part, has been disclosed or is threatened to
be disclosed; and/or
2. Requiring that Employee deliver to Company all information, documents,
notes, memoranda and any and all discoveries or other material as
described above upon Employee's leave of the employ of the Company.
Nothing herein shall be construed as prohibiting the Company from
pursuing other remedies available to the Company for such breach or
threatened breach, including the recovery of damages from the Employer.
ARTICLE V
Term; Terminations
5.01 Term. The term of this agreement shall begin on September 15, 1999 and
continue until September 14, 2002, unless further extended or sooner terminated
as herein provided. On September l4, 2002, and on the 14th day of September each
year thereafter, the term of the Employee's employment shall be automatically
extended one (1) additional year unless, on or before sixty (60) days in advance
of such 14th day of September 2002, the Company shall have delivered to the
Employee or the Employee shall have delivered to the Company written notice that
the term of the Employee's employment hereunder will not be extended.
5.02 Termination. This Agreement and Employee's employment may be terminated in
any one of the following ways:
A. The death of Employee.
B. The Company may terminate the Agreement after thirty (30) days
written notice ("Notice of Termination") to Employee if, because
of illness or physical or mental disability or other incapacity
which continues for a period in excess of three (3) months,
Employee is unable to perform his duties under this agreement.
1. Employee shall not be discharged during the Employment
Period except for justifiable cause. For purposes of
this Agreement, justifiable cause is limited to the
following: willful, material dishonesty, including
theft, misappropriation or material intentional
falsehood; invidious discrimination or significant
harassment, battery or assault of an officer, employee,
customer,
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client or vendor of the Company, whether associated
with race, color, religion, national origin, age, sex,
non-job related disability or any other factor or
status protected by law; willful or wanton breach of
fiduciary duties; material and persistent refusal to
carry out lawfully assigned duties; intentional or
grossly reckless defamation, conviction of a felony or
other illegal public action that materially damages the
Company's reputation. The termination of the Employee
for reasons other than those specified in the preceding
paragraph shall be deemed to be without justifiable
cause. No action or inaction by the Employee shall be
deemed to have occurred under this Agreement unless
written notice of such action or inaction shall have
been given to the Employee by the Company and the
Employee shall have failed to cure or remedy such
defect to the Company's reasonable satisfaction within
sixty (60) days after the Employee receives written
notice of the offending action or inaction. Any
termination of the Employee without justifiable cause
shall entitle the Employee to a minimum severance
package of two (2) years current salary payable over
six (6) monthly installments, or the balance of
$600,000 less any payments made to Employee pursuant to
this agreement, whichever is less. Employee will also
be entitled to immediate issuance of shares in the
Company equal to (he amount that shall be adjusted
proportionately with any salary increase pursuant to
paragraphs 2.01 and 2.06 above that will be 225,000
less shares already issued Employee or 500,000 less
shares already issued Employee whichever number is in
force at the time of the termination.
C. Thirty (30) days notice by Employee of his intent to resign his position.
D. For purposes of this Agreement, a "change in control of the Company"
shall mean a change in control that would be required to be reported in
response to Item I (a) of Form 8-K under the Securities Exchange Act of
0000 (xxx "Xxxxxxxx Xxx"); provided that, without limitation, such a
change in control shall be deemed to have occurred if i) any "person" (as
that term is used in Sections 13(d) and 14(d) of the Exchange Act), other
than the Company, as constituted, is or becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities, (ii)
during any period of three consecutive years during the term of this
Agreement, individuals who at the beginning of such period constitute the
Board cease for any reason to constitute at least a majority thereof,
unless the election of each director who was not a Director at the
beginning of such period has been approved in advance by Directors
representing at least two-thirds of the Directors then in office who were
Directors at the beginning of the period.
F. In the event the Company terminates, or attempts to terminate, the
employment of the Employee other than as provided above, or the Company
otherwise is in breach of the terms of this Agreement, the Company agrees
to pay or reimburse the Employee for, all legal fees, costs and other
damages, including back-pay and benefits if applicable, incurred as a
result of such breach or wrongful termination.
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5.3 Compensation Upon Termination or During Disability
A. During any period that the Employee fails to perform his duties
hereunder as a result of incapacity due to physical or mental
illness ("disability period"), the Employee shall continue to
receive his full salary at the rate then in effect for such
period until his employment is terminated pursuant to section
5.02B hereof.
B. If the Employee's employment shall be terminated pursuant to
Section 5.02B, the Company shall pay the Employee his full
salary through the date of termination, at the rate in effect at
the time Notice of Termination is given, plus all outstanding
expenses payable pursuant to Section 2.02 hereof and the Company
shall have no further obligations to the Employee under this
Agreement.
C. If the Employee shall terminate his employment under Section
5.02D hereof, the Company shall pay the Employee his full salary
through the date of termination at the rate in effect at the
date of termination, plus all outstanding expenses payable
pursuant to section 2.02 hereof.
D. If the Company shall terminate the Employee's employment in
breach hereof or within one year of a "change in control of the
Company", for any reason other than death or disability under
section 5.02A or B, then:
2. The Company shall pay the Employee for any termination
without justified cause a minimum severance package of (2)
years current salary payable over six (6) months
installments, or the balance of $600,000 less any payments
made to Employee pursuant to this agreement, whichever is
less. The amount and stock in this paragraph shall be
adjusted proportionately with any salary increase pursuant to
paragraphs 2.01 and 2.06 above. Employee will be entitled to
immediate issuance of shares in the Company equal to 225,000
less shares already issued Employee or 500,000 less shares
already issued Employee whichever number is in force at the
time of the termination.
3. The Company shall maintain in full force and effect, for the
continued benefit of the Employee for three (3) months from
the date of termination, all employee benefit plans and
programs in which the Employee was entitled to participate
immediately prior to the date of termination provided that
the Employee's continued participation is possible under the
general terms and provisions of such plans and programs. All
such benefit plans and programs shall be maintained at the
level and value provided immediately prior to the date of
termination. In the event that the Employee's participation
in any such plan or program is barred, the Company shall
arrange to provide the Employee with benefits substantially
similar to those which the Employee would otherwise have been
entitled to receive under such plans and programs from which
his continued participation is barred.
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Employer shall be permitted to take key man life insurance
out on employee, with the company as beneficiary in the
amount up to $1,000,000.
Except as required above, the Company shall not be required
to maintain in force for the benefit of the Employee any
employee benefit plans or programs following the date of
termination.
E. The Employee shall not be required to mitigate the amount of any
payment provided for in this Section by seeking other employment
or otherwise.
ARTICLE VI
Representations of Employee
Employee has represented and hereby represents and warrants to the
Company that he is not subject to any restriction or non-competition covenant in
favor of a former employer or any other persons or entity and that the execution
of this Agreement by Employee and his employment by the Company or its
affiliates and the performance of his duties hereunder will not violate or be a
breach of any agreement with a former employer or any other person or entity.
Further, Employee agrees to indemnify the Company and its affiliates for any
claim, including, but not limited to, attorney's fees and expenses of
investigation, by any such third party that such third party may now have or may
hereafter come to have against the Company or its affiliates based upon or
arising out of any non-competition agreement or invention and secrecy agreement
between Employee and such third party.
ARTICLE VII
Miscellaneous
7.01 Complete Agreement. This Agreement is not a promise of future employment.
There are no oral representations, understandings or agreements with the Company
or any of its officers, directors or representatives covering the same subject
matter as this Agreement. This written Agreement is the final, complete and
exclusive statement and expression of the agreement between the Company and
Employee and of all the terms of this Agreement and it cannot be varied,
contradicted or supplemented by evidence of any prior or contemporaneous oral or
written agreements. This written agreement may not be later modified except by a
further writing signed by the Company and Employee, and no term of this
Agreement may be waived except by writing signed by the party waiving the
benefit of such terms.
7.02 No Waiver. No waiver by the parties hereto of any default or breach of any
terms, condition or covenant of this Agreement shall be deemed to be a waiver of
any subsequent default or breach of the same or any other term, condition or
covenant contained herein.
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7.03 Non Delegation of Duties. Employee understands that he has been selected
for employment by the Company on the basis of his personal qualifications,
experience and skills. Employee agrees, therefore, that he cannot delegate any
part of his duties under this Agreement.
7.04 Notice. Whenever any notice is required hereunder, it shall be given in
writing addressed as follows:
To the Company: Enterprises Solutions Inc.
0000 X. Xxxxx Xxxxxxx
Xxxx Xxxxx, XX 00000
To Employee: Xxxx X. Xxxxxxx
00 Xxxxx Xxxx
Xxxxxx, XX 00000
Notice shall be deemed given and effective three (3) days after the deposit in
the Unites States mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received. Either
party may change the address for notice by notifying the other party of such
change in accordance with this Section 7.04.
7.05 Severability: Headings. If any portion of this Agreement is held invalid or
inoperative, the other portions of this Agreement shall be deemed valid and
operative and, so far as is reasonable and possible, effect shall be given to
the intent manifested by the portion held invalid or inoperative. The paragraph
headings herein are for reference purposes only and are not intended in any way
to describe, interpret, define or limit the extent or intent of this Agreement
or of any part hereof.
7.06 Arbitration. Any controversy or claim arising out of or relating to this
Agreement or the breach thereof shall be settled by arbitration in the City of
Boca Raton, Florida in accordance with the rules then existing of the American
Arbitration Association and judgement upon the award may be entered in any Court
having jurisdiction thereof.
7.07 Governing Law. This Agreement shall in all respects be construed according
to the laws of the State of Florida.
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IN WITNESS WHEREOF, the parties,have executed this Agreement as of the day and
date herein first set forth.
ENTERPRISES SOLUTIONS INC.
WITNESSED BY:
/s/ Xxxxx X. Xxxxx, Pres.
-------------------------
___________________ Xxxxx Xxxxx
Corporate President
Dated: ____________
EMPLOYEE:
WITNESSED BY:
___________________ /s/ Xxxx X. Xxxxxxx
-------------------
Xxxx X. Xxxxxxx
Dated:_____________
