EXHIBIT N0. 10.13
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of October 9, 1996 by and between
Porta Systems Corp., a Delaware corporation (the "Company"), and Xxxxxxx Xxxxx
(the "Executive").
WHEREAS, the Company wishes to employ the Executive upon the terms and
conditions set forth in this Agreement; and
WHEREAS, the Executive is willing to serve in the employ of the Company
upon the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and agreements hereinafter set forth, the Company and the Executive agree as
follows:
1. EMPLOYMENT AND DUTIES. (a) The Company hereby employs the Executive
pursuant to this Agreement to render full-time exclusive services to the Company
during the Term (as defined in Section 2 hereof) as President of the Company or
in such other executive capacity as may be designated by the Chairman of the
Company from time to time. In performing such duties, the Executive shall be
subject to the direction of the Chairman of the Company from time to time. The
Executive hereby accepts such employment and agrees to devote his full time,
attention and best efforts exclusively to performing the duties described above.
(b) The Executive agrees to perform such duties as may be assigned or
delegated to him by the Chairman of the Company and to be bound by the policies
of the Company and its Affiliates as in effect from time to time. The executive
further agrees to accept election, and to serve, during all or part of a Term,
as an employee, officer or director of an "Affiliate" as defined in Section (6)
(f) hereof if assigned or elected to such position by the Board of Directors of
the Company or by the board of directors or similar governing body of any
Affiliate, and to perform such services for any such Affiliate as may be
assigned, without additional compensation therefor other than that specified in
this Agreement.
2. TERM. The Company shall employ the Executive pursuant to this Agreement
commencing on the date hereof and shall continue until
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December 31, 1997, which period shall automatically be extended for an
additional twelve month period on January 1 of each year after the date hereof
while the Agreement remains in effect unless the Company shall have given notice
to the Executive, at least sixty days prior to such January 1, that it has
elected to terminate this Agreement at the then expiration date of this
Agreement, subject to the earlier termination at any time during the Executive's
period of employment as hereinafter provided (the "Term").
3. COMPENSATION. (a) The Company shall pay the Executive an annual salary
for the services to be rendered by him from the date hereof at an annual rate of
One Hundred Sixty Thousand dollars ($160,000.00) to be reviewed by the Board of
Directors of the Company ("Board") at least annually, commencing January 1,
1998, but which Executive's annual salary rate last fixed by the Board, payable
in periodic installments in accordance with the Company's regular payroll
practices as in effect from time to time ("Salary"). Notwithstanding the
foregoing, the Executive's Salary may be reduced if and to the extent that the
salaries payable to all executive officers of the Company shall be reduced on a
uniform or percentage basis.
(b) The Executive shall be entitled to participate in and receive the
benefits under any bonus arrangements, health, life, accident and disability
insurance plans or programs and any other employee benefit or fringe benefit
plans, perquisites or arrangements which the Company makes available generally
to other employees of the Company to the extent that the Executive is otherwise
eligible to participate in such plans or arrangements pursuant to the provisions
of such plans or arrangements as they may be in effect from time to time.
(c) During the period of his employment hereunder, the Executive shall be
entitled to two weeks paid non-cumulative vacation each year or such greater
period of vacation consistent with the Company's policy with respect to vacation
in effect from time to time.
(d) Executive shall receive a monthly automobile allowance of $600.00,
which allowance shall terminate immediately upon any termination of his
employment.
4. TERMINATION OF EMPLOYMENT. (a) The Executive's employment hereunder
shall terminate automatically as of the date of his death or upon the
Executive's termination due to disability as determined by the Company's
long-term disability carrier at that time. In the event of termination for death
or long-term disability the Company shall pay
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to the Executive's estate of beneficiary or to the Executive, in full
satisfaction of its liabilities hereunder, a payment equal to six month's
salary.
(b) The Company may at any time at its option, exercised by not less than
10 days written notice to the Executive, terminate his employment for "Cause"
(as hereinafter defined). In the event of termination for Cause, the Company
shall have no further obligations or liabilities to the Executive hereunder. For
purposes of this Agreement, the term Cause means any conviction (or plea of nolo
contendere) of the Executive of a felony or misdemeanor (other than for motor
vehicle or similar minor offenses) under the laws of the United States or any
state thereof; any material breach by the Executive of this Agreement or any
material failure of the Executive to perform his duties hereunder; intentional
dishonesty or gross negligence by the Executive in the performance of his duties
hereunder; the failure by the Executive to comply with any policies of the
Company or any Affiliate for which he renders services; or conduct on the part
of the Executive which damages the reputation of the Company, which achieves
general notoriety with respect to conduct or alleged conduct by the Executive
which is scandalous, immoral or illegal or which is disruptive of the business
and affairs of the Company and its Affiliates.
(c) The Company may at any time at its option, exercised by not less than
10 days written notice to the Executive (or pay in lieu thereof), terminate his
employment prior to the expiration of the Term other than for Cause, provided
that, if the Company so terminates the Executive's employment other than for
Cause, the Executive shall be entitled to continue to receive, as severance,
payment of Salary at the most recent annual rate in effect prior to the date of
such termination for a period of six months following the date of such
termination of employment, plus one additional month of Salary at such rate for
each full year of service with the Company prior to such termination; provided,
however, that in no event shall the amount of severance payable under this
Section 4(c) exceed a maximum of thirty-six (36) months' salary and provided
further that the amount of severance payable under this Section 4(c) shall
continue to be paid in the event of the Executive's death after termination of
his employment. If the annual bonus payable to the Executive has already been
determined by the Company at the time his employment is terminated other than
for Cause, the Executive shall receive a bonus payment in such amount following
his termination of employment. In all other circumstances, no bonus shall be
payable to Executive under this Section 4(c) following his termination of
employment. The Company shall continue to pay insurance premiums for the same
medical and dental health care benefits to which the Executive was entitled
prior to such termination for the period of time permitted under the relevant
policy but no longer than the period of such salary continuance,
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provided that the Company's medical and dental health carrier or carriers are
willing to continue to provide such coverage upon the payment of such premium or
premiums.
(d) The parties agree that the severance amount payable to the Executive
pursuant to Section 4(c) shall constitute liquidated damages in the event of
termination of this Agreement by the Company other than for Cause. The parties
agree that the damages payable to the Executive in the event of such termination
would be difficult to estimate accurately, the severance amount bears a
reasonable relationship to the amount of damages anticipated by the parties as
of the date hereof and the severance amount is not a penalty. In reliance on the
validity of this liquidated damages provision, the Company has waived any
obligation of the Executive to mitigate damages by seeking other employment and
the severance amount shall not be reduced by compensation earned in such other
employment.
(e) In the event of the Executive's termination of employment other than
for Cause, the Company shall have no further obligations or liabilities to the
Executive hereunder, other than to make such severance payments as provided in
Section 4(c), to provide such medical and dental benefits as provided in
Section 4(c) and to receive benefits under stock plans, life insurance
arrangements and supplemental retirement arrangements in accordance with the
terms of agreements with the Executive on these matters. Upon payment of the
amounts provided in Section 4(c), the Company shall have no further liability
of any kind or nature whatsoever to the Executive under law or this Agreement
relating to his employment. The payment to the Executive under Section 4(c)
shall be in lieu of and in discharge of any obligations of the Company to the
Executive for Salary, bonus, or under any separation or severance pay plan or
for other compensation or expectation of remuneration or benefit in connection
with the Executive's employment or the termination thereof. In consideration for
the payments hereunder, the Executive hereby irrevocably and unconditionally
releases and discharges the Company and each of the Company's successors,
shareholders, Affiliates, directors, officers, employees, representatives,
agents, assigns, attorneys, divisions (and agents, directors, officers,
employees, representatives and attorneys of such successors, shareholders,
Affiliates and divisions) and all persons acting by, through or under or in
concert with any of them from any and all charges, complaints, claims,
liabilities, obligations, controversies, damages, causes of action, costs and
expenses of any nature whatsoever, at law or at equity, whether known or
unknown, arising now or in the future, including but not limited to rights under
any federal, state or local laws respecting the terms and conditions of
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employment, in connection with the Executive's employment by the Company and the
termination thereof under this Agreement.
(f) The Executive agrees that he will provide at least three (3) months
written notice of his intent to terminate this Agreement prior to the expiration
of the initial or any extended Term. The Executive agrees that, without the
prior written consent of the Company, he will not take any action, solicit any
proposals, or engage in discussions or negotiations that could be expected to
result in a breach of his agreement in this Section 4(f).
5. COVENANTS. (a) In view of the fact that the Company is engaged in
specialized businesses, which businesses are conducted throughout the world, and
the information, research and marketing data developed by the Company are
confidential, the Executive agrees that, during the Term and for a period equal
to the period during which payments are made pursuant to Section 4(c) hereof,
he will not directly or indirectly engage in the business substantially
conducted by the Company or any Affiliate at the date of such termination and
for which the Executive performed material services during the period of his
employment, either for himself or for any person, employer, business or other
entity in competition with the Company or such Affiliate, engage in any such
business on his own account, or become interested in any such business, directly
or indirectly, as an individual, partner, shareholder, officer, director,
principal, agent, employee, trustee, consultant of in any other relationship or
capacity; provided, however, that nothing contained herein shall be deemed to
prohibit the Executive from acquiring solely as an investment up to two (2)
percent of the issued and outstanding shares of capital stock of any public
corporation engaged in any such competitive business. During the Term and for a
period equal to the period during which the Executive receives payments pursuant
to section 4(c) hereof, the Executive and any entity controlled by him or by
which he is employed shall not solicit, interfere with, hire, offer to hire or
induce any person who is or was an officer, employee, customer, supplier or
agent of the Company or any Affiliate to discontinue his or her relationship
with the Company or such Affiliate or to accept employment by any other entity
or person.
(c) The Executive agrees to keep secret and retain in the strictest
confidence all confidential matters which relate to the Company or any
Affiliate, including, without limitation, customer lists, trade secrets, pricing
policies and other business affairs of the Company and any Affiliate learned by
him from the Company or any Affiliate or otherwise heretofore or hereafter, and
not to disclose any such confidential matter to anyone outside the Company or
any Affiliate, whether during or after his period of service
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with the Company, except in the course of performing his duties hereunder. Upon
request by the Company, the Executive agrees to deliver promptly to the Company
upon termination of his services for the Company, or at any time thereafter as
the Company may request, all Company memoranda, notes, records, reports,
manuals, drawings, designs, computer files in any media and other documents (and
all copies thereof) relating to the Company's or any Affiliate's business and
all property of the Company or any Affiliate associated therewith, which he may
then possess or have under his control.
(d) The Executive agrees that all processes, technologies and inventions,
including new contributions, improvements, formats, packages, programs, systems,
machines, compositions or matter manufactured, developments, applications and
discoveries which are related in any manner to the business (commercial or
experimental) of the Company or any of its Affiliates (collectively, "New
Developments"), whether patentable or not, conceived, developed, invented or
made by him or jointly with others during the period of his employment with the
Company, shall belong to the Company and the Company shall be the sole owner of
all the products and proceeds of the Executive's services, including
intellectual or literary property in any form. The Executive shall further:
promptly disclose such new Developments to the Company; assign to the Company,
without additional compensation, all patent or other rights to such New
Developments for the United States and foreign countries; sign all papers
necessary to carry out the foregoing; and give a reasonable amount of testimony
in support of his inventorship.
(e) If the Executive commits a material breach of any of the provisions of
this Section 5 or Section 4(f), the Company or any Affiliate shall have the
right and remedy to have the provisions of this Agreement specifically enforced
by any court of competent jurisdiction, it being acknowledged by the Executive
and agreed that any such breach will cause irreparable injury to the Company or
such Affiliate and that money damages will not provide an adequate remedy to the
Company or such Affiliate. Such rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available to the Company or any
Affiliate at law or in equity. The provisions of this Section 5 shall survive
the expiration or termination of this Agreement.
6. GRANT OF OPTIONS. The Company hereby agrees to grant to Executive a
non-qualified option ("the Option") to purchase thirty-five thousand (35,000)
shares of the Company's common stock, par value $.01 per share, pursuant to the
Company's 1996 Stock Option Plan.
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7. MISCELLANEOUS. (a) Neither of the parties hereto shall have the right to
assign this Agreement or any rights of obligations hereunder without the prior
written consent of the other party; provided, however, that this Agreement shall
inure to the benefit of and be binding upon the successors and assigns of the
Company upon any sale of all or substantially all of the Company's assets, or
upon any merger or consolidation of the Company with or into any other
corporation, all as though such successors and assigns of the Company and their
respective successors and assigns were the Company.
(b) The Agreement and the relationship of the parties in connection with
the subject matter of this Agreement shall be construed and enforced according
to the laws of the State of New York without giving effect to the conflict of
laws rules thereof.
(c) This Agreement contains the full and complete agreement of the parties
relating to the employment of the Executive hereunder and supersedes all prior
agreements, arrangements or understandings, whether written or oral, relating
thereto. This Agreement may not be amended, modified or supplemented, and no
provision or requirement hereof may be waived, except by written instrument
signed by the party to be charged. This Agreement shall not in any way reduce
any amount otherwise payable, or in any way limit the Executive's rights under
any employee benefit plan, stock award plan or other plan or arrangement of the
Company, nor shall such arrangement limit the Executive's rights under this
Agreement.
(d) If any provision of this Agreement is held to be invalid or enforceable
by any judgment of a tribunal of competent jurisdiction, the remainder of this
Agreement shall not be affected by such judgment, and this Agreement shall be
carried out as nearly as possible according to its original terms and intent.
(e) Any dispute or question arising from this Agreement or its
interpretation shall be settled exclusively by arbitration in New York, N.Y. in
accordance with the commercial rules then in effect of the American Arbitration
Association. Judgment upon an award rendered by the arbitrator(s) may be entered
in any court of competent jurisdiction, including courts in the state of New
York. Any award so rendered shall be final and binding upon the parties hereto.
All costs and expenses of the arbitrator(s) shall be paid as determined by such
arbitrator(s), and all costs and expenses of experts, witnesses and other
persons retained by the parties shall be borne by them respectively. In the
event that injunctive relief shall become necessary
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under this Agreement, either of the parties shall have the right to seek
provisional remedies prior to an ultimate resolution by arbitration.
(f) As used herein, the term "Affiliate" shall mean any corporation or
business entity controlling, controlled by or under common control with the
Company.
(g) Any notice required or permitted to be given under this Agreement shall
be sufficient if it is in writing, and if it is sent by registered mail to his
residence, in the case of the Executive, and to the Secretary of the Company at
its principal executive offices, in the case of the Company, or to such other
person or address as either party shall designate in writing to the other.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
PORTA SYSTEMS CORP.
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Chairman
/s/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx
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