AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Agreement is effective as of the 1st day of February 2003
("Agreement") and is by and between XXXXXXXXXXX.XXX, INC., a Nevada corporation
("Company"), and XXXX XXXXXX, a resident of the State of Florida ("Executive").
WHEREAS, the Company and the Executive entered into an Employment Agreement
dated May 21st of 2001;
WHEREAS, the Company desires to continue to employ the Executive and the
Executive desires to continue to be employed by the Company pursuant to revised
terms and conditions; and
WHEREAS, the Company and the Executive wish to enter into a new employment
agreement, covering the continued employment of the Executive by the Company.
NOW, THEREFORE, in consideration of the promises and the mutual covenants
set forth in this Agreement, and intending to be legally bound, the Company and
the Executive agree as follows:
1. Term of Employment
(a) Offer/Acceptance/Effective Date. The Company hereby offers employment
to the Executive, and the Executive hereby accepts employment with the Company,
subject to the terms and conditions set forth in this Agreement.
(b) Termination of Prior Agreement. Upon execution of this Agreement by
both parties, the Employment Agreement dated May 21st 2001, will automatically
terminate and this Agreement will supersede and replace the Employment Agreement
dated May 21st 2001.
(c) Term. The term of this Agreement shall commence on the date first
indicated above and shall remain in effect for two (2) years thereafter (Term").
2. Duties.
(a) General Duties. The Executive shall serve as the President and Chief
Executive Officer of the Company with duties and responsibilities that are
customary for such executives including, without limitation, the overall
management, leadership and future vision of the Company subject to the approval
and ratification of such other duties from time to time by the Board of
Directors of the Company.
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(b) Best Efforts. The Executive covenants to use his best efforts to
perform his duties and discharge his responsibilities pursuant to this Agreement
in a competent, diligent and faithful manner.
(c) Devotion of Time. The Executive shall devote substantially all of his
time, attention and energies during normal business hours to the Company's
affairs (exclusive of periods of sickness and disability and of such normal
holiday and vacation periods as have been established by the Company).
Notwithstanding the foregoing, Executive shall have the right and is encouraged
to devote time, attention and energies during normal business hours to Civic and
business organizations. Executive's devotion of time, attention and energies
during normal business hours to such endeavors shall not be a breach of this
employment agreement. It is also understood the Executive has personal business
investments that from time to time may require his attention during business
hours, such activities shall not be of competing interests to the company and
shall not be a breach of his employment agreement.
3. Compensation and Expenses.
(a) Base Salary. For the services of the Executive to be rendered by him
under this Agreement, the Company shall pay the Executive for each of the
periods indicated below an annual base salary ("Base Salary") as follows:
(i) From February 1st 2003 to December 31st 2003, the amount of $185,000;
(ii)From January 1, 2004, the amount of $200,000; increased, but not
decreased, based upon a review by the Compensation Committee prior to the
end of the Company's fiscal year preceding the relevant compensation
period.
The Base Salary shall be prorated for any period of less than a full
calendar year.
The Company shall pay the Executive his Base Salary in equal installments
no less frequently than semi-monthly.
(b) Base Salary Adjustment. The Base Salary may not be decreased hereunder
during the Term of this Agreement, but may be increased upon review by, and at
the sole discretion of, the Company's Board of Directors.
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(c) Bonus. Executive shall be entitled to receive quarterly bonus
compensation in an amount as approved by the Company's Board of Directors based
upon the performance criteria as may be established by the Compensation
committee from time to time. Such bonuses may be paid in cash or issued in
shares of the Company's common stock as elected by Executive and will be
advanced monthly. At no time may the bonus be less than 3% of the Company's
EBITDA as computed under GAAP. The Executive may elect to receive the bonus in
the Company's common stock at 90% of the current market value. Current market
value shall be the closing base price of the Company's common stock on the last
trading day of the quarter in which the bonus has been earned.
(d) Option Bonus: The Executive shall be entitled to receive an option to
purchase not less than 25,000 shares of the Company's common stock, exercisable
at the fair market price, for each month the Company has net income before
income taxes and extraordinary items, as computed in accordance with GAAP (the
"Bonus Options"). The Bonus Options shall vest during the remaining term of the
Executives employment Agreement, and will expire not less than five (5) years
from the date of grant.
(e) Expenses. In addition to any compensation received pursuant to this
Section 3, the Company will pay on behalf of the Executive or will reimburse the
Executive for all reasonable expenses incurred in connection with the
performance of his duties under this Agreement, including but not limited to
expenses for travel, education, seminars, trade shows, entertainment, and
professional dues, provided that the Executive properly accounts for such
expenses to the Company in accordance with the Company's practices. Such advance
payments and/or reimbursements shall include travel, lodging and food costs for
the Executive's immediate family to the extent they accompany the Executive on
business related travel.
(f) Subsidiary and Affiliate Payments. In recognition of the fact that in
the course of the performance of his duties hereunder, the Executive may provide
substantial benefits to the Company's subsidiaries or affiliated companies, the
Executive and the Company may at any time and from time to time agree that all
or any portion of the compensation due the Executive hereunder may be paid
directly to the Executive by one or more of the Company's subsidiaries or
affiliated companies.
(g) Additional Equity Based Incentive Compensation. The Executive shall be
entitled to additional annual equity-based incentive compensation as set forth
in the Company's Management Incentive Compensation Plan as established by the
Compensation Committee of the Board of Directors.
(h) Personal Expense Allowance. In addition to the reimbursement of
expenses under subsection (d) above, the Company shall pay the Executive a
personal expense allowance of not less than $1,000 per month during the term of
this Agreement.
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4. Benefits.
(a) Vacation and Holidays. For each calendar year during the Term during
which the Executive is employed, the Executive shall be entitled to vacation
(which shall accrue and vest, except as may be hereinafter provided to the
contrary, on each January lst thereof) without loss of compensation or other
benefits to which he is entitled under this Agreement, as follows:
(i) For the remainder of calendar year 2003, 20 work days;
(ii) For calendar year 2004, 20 work days.
The Executive shall carry-over any vacation time earned in his previous
employment agreement. The Executive will also be entitled to the paid holidays
set forth in the Company's policies.
If the Executive is unable to take all of his vacation days during a year
for which he becomes vested therein, then the Executive at his sole option, may
elect to (x) carry over any unused vacation to the next calendar year to be used
solely in that next year or (y) receive an appropriate pro rata portion of his
Base Salary corresponding to the year in which vacation days vested.
The Executive shall take his vacation at such times as the Executive may
select and the affairs of the Company or any of its subsidiaries or affiliates
may permit.
(b) Employee Benefit Programs. In addition to the compensation to which the
Executive is entitled pursuant to the provisions of Section 3 hereof, during the
Term, the Executive will be entitled to participate in any stock option plan,
stock purchase plan, pension or retirement plan, and insurance or other employee
benefit plan that is maintained at that time by the Company for its employees,
including any programs of life, disability, basic medical and dental, and
supplemental medical and dental insurance. (c) Automobile Allowance. During the
Term of this Agreement, the Company shall pay the Executive an additional $750
per month as an automobile allowance to be applied to any automobile expense
incurred by the Executive, which amount may be increased but not decreased by
the Board of Directors.
(d) Annual Physical. The Executive agrees to have an annual physical
examination performed by a physician of his choice during each year of this
Agreement. The Company shall reimburse Executive for the costs of his annual
physical examination.
(e) Educational Benefits. The Company shall pay or reimburse the Executive
for all educational endeavors of the Executive, provided the educational
establishment is considered of good reputation and the studies are relevant to
the Company's business or the Executive's management duties.
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5. Termination.
(a) Termination by Company for Cause. The Company may only terminate the
Executive's employment pursuant to this Agreement before expiration of the Term,
for cause only upon fulfillment of the events described in subparagraph 5(a)(i)
below. Upon any such termination for cause, the Executive shall have no right to
other compensation, bonus or reimbursement under Section 3 or to participate in
any employee benefit programs or other benefits to which he may be entitled
under Section 4 for any period subsequent to the effective date of termination;
provided, however, that any vested but unexercised options shall remain in
effect following any such termination but all unvested options shall expire.
For purposes of this Agreement, the term "cause" shall mean only:
(i) the Executive's conviction of a crime involving fraud, theft or
misappropriation involving the Company or any of its subsidiaries or
affiliates and all appeals with respect thereto have been extinguished or
abandoned by the Executive;
(b) Death or Disability. This Agreement and the Company's obligations
hereunder will terminate upon the death or disability of the Executive. For
purposes of this Section 5(b), "disability" shall mean that for a period of six
(6) months in any twelve-month period, the Executive is incapable of
substantially fulfilling the essential functions of the Executive's duties set
forth in this Agreement because of physical, mental or emotional incapacity
resulting from injury, sickness or disease as determined by an independent
physician mutually acceptable to the Company and the Executive. Upon any
termination of this Agreement due to death or disability, the Company will
promptly pay the Executive or his designated beneficiaries, as the case may be,
any accrued but unpaid then current Base Salary (which may include any accrued
but unused vacation time) through the date of such termination of employment
plus any other compensation that may be due and unpaid plus a lump-sum payment
equal to 2.99 times the then current Base Salary. Any unexercised options will
remain in effect in accordance with such options terms.
(c) Voluntary Termination. Prior to any other termination of this
Agreement, the Executive may, on thirty-days (30) prior written notice to the
Company given at any time during the Term, terminate his employment with the
Company. Upon any such termination with proper notice, the Company shall
promptly pay the Executive any accrued but unpaid Base Salary through the date
of such termination of employment (not including any accrued but unused vacation
time) plus a payment equal to two (2) times the then current Base Salary
(payable in one lump sum or in monthly payments as elected by the Executive) and
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the Executive shall have no further right to other compensation, bonus or
reimbursement under Section 3 or to participate in any employee benefit programs
or other benefits to which he may be entitled under Section 4 for any period
subsequent to the effective date of such termination; provided, however, that
any vested but unexercised options shall remain in effect following any such
termination and all unvested options shall immediately vest upon such
termination.
(d) Termination for any reason other than for "Cause", Death or Disability
or Voluntary Termination. In the event the Executive's employment is terminated
for any reason other than (i) for "Cause" (paragraph 5(a)), (ii) Death or
Disability (paragraph 5(b)), or (iii) Voluntary Termination by Executive
(paragraph 5(c)), then the Company shall be obligated to immediately pay the
Executive a cash lump sum equal to 2 times the then current Base Salary and any
vested but unexercised options shall remain in effect and all unvested options
shall immediately vest upon the effective date of termination pursuant to this
paragraph.
6. Restrictive Covenants.
(a) Competition with the Company. The Executive covenants and agrees that
during the Term, and for a period of twenty (24) months after termination of
this Agreement, the Executive shall not, without the prior written consent of
the Company, directly or indirectly (whether as a sole proprietor, partner,
member, stockholder, director, officer, employee or in any other capacity as
principal or agent) compete with the Company. Notwithstanding the foregoing, if
the Executive is terminated pursuant to Section 5(d) or termination occurs for
any reason other than for "Cause" (including voluntary termination) after a
Change of Control as described in Section 7, the 24-month non-compete provision
set forth in this Section 6(a) shall be released and be of no further force or
effect, unless the Executive elects to have the non-competition covenant take
effect, in which case the Company shall pay the Executive his Base Salary within
the 24-month (or such shorter period as elected by Executive) non-compete
period. Notwithstanding this restriction, Executive shall be entitled to invest
in stock of other competing public companies so long as his ownership is less
than 5% of such company's outstanding shares. If the Company does not employ the
Executive beyond the expiration of the Term the Company shall pay the Executive
the Base Salary in effect upon expiration of Term during the 24-month
non-compete period stated above, or, with the approval of the Executive, may
release and waive the foregoing non-competition provision.
(b) Disclosure of Confidential Information.
(i) The Executive acknowledges that during his employment he will gain
and have access to confidential information regarding the Company and its
subsidiaries and affiliates. The Executive acknowledges that such
confidential information as acquired and used by the Company or any of its
subsidiaries or affiliates constitutes a special, valuable and unique asset
in which the Company or its subsidiaries or affiliates, as the case may be,
holds a legitimate business interest. All records, files, materials and
confidential information (the "Confidential Information") obtained by the
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Executive in the course of his employment with the Company shall be deemed
confidential and proprietary and shall remain the exclusive property of the
Company or its subsidiaries or affiliates, as the case may be. The
Executive shall not, except in connection with and as required by his
performance of his duties under this Agreement, (i) use any Confidential
Information for his own benefit or the benefit of any person or entity with
which he may be associated other than the Company; or (ii) disclose any
Confidential Information to any person, firm, corporation, association or
other entity for any reason or purpose whatsoever without the prior written
consent of the Board of Directors of the Company, unless such information
previously shall have become public knowledge through no action by or
omission of the Executive.
(ii) If the Executive is requested or becomes legally compelled (by
oral questions, interrogatories, requests for information or documents,
subpoena, civil or criminal investigative demand, or similar process) or is
required by a regulatory body to make any disclosure that is prohibited or
otherwise constrained by this Agreement, the Executive will proved the
Company with prompt notice of such request so that the Company may seek an
appropriate protective order or other appropriate remedy. Subject to the
foregoing, the Executive may furnish that portion of the Confidential
Information that, in the written opinion of its counsel reasonably
acceptable to the Company, the Executive is legally compelled or is
otherwise required to disclose or else stand liable for contempt or suffer
other material censure or material penalty.
(c) Subversion, Disruption or Interference. At no time during the Term of
this Agreement shall the Executive, directly or indirectly, interfere, induce,
influence, combine or conspire with, or attempt to induce, influence, combine or
conspire with, any of the employees of, or consultants to, the Company to
terminate their relationship with the Company or compete with or ally against
the Company or any of its subsidiaries or affiliates in the business in which
the Company or any of its subsidiaries or affiliates is then engaged in. The
Executive shall be permitted to enter into outside business interests with
employees and or consultants, provided it shall not have an adverse effect or be
of a competitive nature to the company.
(d) Enforcement of Restrictions. The parties hereby agree that any
violation by Executive of the covenants contained in this Section 6 will likely
cause irreparable damage to the Company or its subsidiaries and affiliates and
may be restrained by process issued out of a court of competent jurisdiction, in
addition to any other remedies provided by law.
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7. Change of Control.
(a) For purposes of this Agreement, "Change of Control" means:
(i) the closing of any merger, combination, consolidation or similar
business transaction involving the Company in which the holders of a
majority of the shares of the common stock of the Company immediately prior
to such closing are not the holders of a majority of the ordinary voting
securities of the surviving entity in such transaction; or
(ii)the closing of any sale by the Company of all or substantially all of
its assets to an acquiring entity in which the holders of a majority of the
shares of common stock of the Company immediately prior to such closing are
not the holders of a majority of the ordinary voting securities of the
acquiring entity; or
(iii) the closing of any sale by the holders of common stock of the
Company of an amount of common stock that equals or exceeds a majority of
the shares of common stock of the Company immediately prior to such closing
to an entity in which the holders of a majority of the shares of the common
stock of the Company immediately prior to such closing are not the holders
of a majority of the ordinary voting securities; or
(iv) a change in the composition of the Board of Directors of the Company
such that the current members of the Board of Directors are no longer the
majority in number of the Board of Directors.
(v) An Event of Default is declared under the Securities Purchase
Agreement, Registration Rights Agreement, Certificate of Designation of
Series A Preferred Stock or other related agreements with the holders of
the Company's Series A Preferred Stock.
(vi) Any holder of the Series A Preferred Stock elects to convert the
Series A Preferred Stock into shares of the Company's common stock, which
results in the holders of the Series A Preferred Stock (or their
affiliates) owning greater than fifteen percent (15%) of the outstanding
number of shares of the Company's common stock.
(b) If, during the Term, the Executive's employment is terminated by the
Company after a Change of Control, the Executive shall be entitled to promptly
receive, subject to the provisions of subsection (c) below, a lump-sum payment
equal to 2.99 times the Executive's current Base Salary in addition to any other
compensation that may be due to and owing to the Executive under Section 3
hereof and all stock options issued to Executive shall immediately vest and be
exercisable in full at any time over the remaining term of the stock options. In
addition, in the event of a Change of Control, the Executive shall be released
from the non-competition provisions of Section 6(a) and such restrictive
covenants against competition shall be of no further force or effect.
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(c) If, during the Term, a Change of Control event occurs and the Executive
voluntarily terminates pursuant to Section 5(c), the Executive shall be
immediately and automatically released from the non-competition provisions of
Section 6(a) and this non-compete restrictive covenant shall be of no further
force or effect.
(d) The amounts payable to the Executive under any other compensation
arrangement maintained by the Company which become payable after payment of the
lump-sum provided for in subsection (b) above upon or as a result of the
exercise by Executive of rights which are contingent on a Change of Control (and
would be considered a "parachute payment" under Internal Revenue Code 280G and
regulations thereunder), shall be reduced to the extent necessary so that such
amounts, when added to such lumps-sum, do not exceed 2.99 times the Executive's
Base Salary (as computed in accordance with provisions of the Internal Revenue
Code of 1986, as amended and any regulations promulgated thereunder) for
determining whether the Executive has received an excess parachute payment. Any
such excess amount shall be deferred and paid in the next tax year.
(e) In the event of a proposed Change of Control, the Company will allow
the Executive to participate in all meetings and negotiations related thereto.
8. Indemnification and Insurance. To the maximum extent permitted by law
and the Company's by-laws, the Company shall indemnify the Executive with
respect to the performance of his duties under this Agreement. The Company will
maintain directors and officers liability insurance, and agrees to advance to
the Executive the costs of defense of any lawsuit against him with respect to
his service to the Company under this Agreement.
9. Assignability. The rights and obligations of the Company under this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company, provided that such successor or assign shall acquire all
or substantially all of the assets and business of the Company. The Executive's
rights and obligations hereunder may not be assigned or alienated and any
attempt to do so by the Executive will be void.
10. Severability. If any provision of this Agreement is deemed to be
invalid or unenforceable or is prohibited by the laws of the state or
jurisdiction where it is to be performed, this Agreement shall be considered
divisible as to such provision and such provision shall be inoperative in such
state or jurisdiction and shall not be part of the consideration moving from
either of the parties to the other; provided, however, that the provisions of
Section 6 may be modified and enforced by a court in any legal or equitable
action as necessary to comply with applicable law as determined by the court.
The remaining provisions of this Agreement shall be valid and binding.
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11. Notice. Notices given pursuant to the provisions of this Agreement
shall be sent by certified mail, postage prepaid, or by overnight courier, or
telecopier, to the following address:
To the Company:
xXxxxxxxxxx.xxx
000 Xxxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
To the Executive:
Xxxx Xxxxxx
0000 Xxxxxxxxxx Xxxxx
Xxxxx, XX 00000
Either party may, from time to time, designate any other address to which
any such notice to it or him shall be sent. Any such notice, shall be deemed to
have been delivered upon the earlier of actual receipt or four days after
deposit in the mail, if by certified mail.
12. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal, substantive laws of the State of
Florida without giving effect to the conflict of laws rules thereof.
(b) Waiver/Amendment. The waiver by any party to this Agreement of a breach
of any provision hereof by any other party shall not be construed as a waiver of
any subsequent breach by any party. No provision of this Agreement may be
terminated, amended, supplemented, waived or modified other than by an
instrument in writing signed by the party against whom the enforcement of the
termination, amendment, supplement, waiver or modification is sought.
(c) Attorney's Fees. In the event any legal or equitable action is
commenced to enforce the terms and conditions hereof, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and expenses.
(d) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and replaces and
supersedes any prior agreements or understandings.
(e) Counterparts. This Agreement may be executed in counterparts, all of
which shall constitute one and the same instrument.
(f) Attorney Review. The parties acknowledge that each has had an
opportunity to retain an attorney to review the terms and conditions of this
Agreement. No provision hereof shall be interpreted against the interests of one
party solely because such provision was drafted by such party or by the attorney
for such party.
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(g) Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the breach of this Agreement, shall be settled by arbitration
in accordance with the rules of the American Arbitration Association conducted
in a location selected by Executive. A judgment of a court having jurisdiction
may be entered upon the arbitrator's award.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Agreement as of the day and year first above written.
COMPANY:
XXXXXXXXXXX.XXX, INC.
By:
-----------------------------------------
Name: Xxxxxxx Xxxxxxx
Its: Chairman
EXECUTIVE:
XXXX XXXXXX
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