Exhibit 10.1
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT ("Agreement") made and entered into as of October
9, 2002 by and between US Patriot, Inc., a South Carolina corporation
("Company"), and Xxxxx Xxxxxxxx ("Executive").
WHEREAS, Company desires to employ Executive as its Chief Executive
Officer and Executive desires to be employed by Company, upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth and the mutual benefits to be derived herefrom, and intending to be
legally bound hereby, the Company and the Executive agree as follows:
1. Employment and Term. Company hereby employs Executive and Executive
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hereby accepts employment for a term commencing on October 9, 2002 and
continuing until October 9, 2007, unless sooner terminated as provided for in
this Agreement. Executive hereby warrants and represents to Company that he is
free to enter into this Agreement and is not a party to any agreement, written
or otherwise, or bound by any restrictions, which limit or restrict him from
entering into this Agreement or performing the services, duties and
responsibilities called for hereunder.
2. Duties.
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2.1 Executive shall perform the duties of the Chief Executive
Officer of the Company and such additional executive duties of Company and its
affiliates as may be, from time to time, requested of him by the Company`s Board
of Directors. As Chief Executive Officer of the Company, the Executive shall
report to the Company`s Board of Directors. The Company shall indemnify the
Executive for all acts performed as an officer of the Company to the maximum
extent permitted by law.
2.1.1 The duties as Chief Executive Officer of the
Company shall include but not be limited to the following: (i) general and
active management of the business of the Company; (ii) executing bonds,
mortgages and other contracts requiring the seal of the Company; (iii) acting as
an Ex-Offico member of all committees of the Company; (iv) have the general
powers and duties of supervision and management usually vested in the office of
Chief Executive Officer of a company; (v) assisting the Board of Directors in
formulating the business plan, goals and objectives for the Company`s future
growth.
2.2 Executive shall devote his full professional time and best
efforts to the performance of his duties and responsibilities hereunder to
advance the interests of the Company and shall not during the term of this
Agreement (as defined in Section 1 hereof) be employed, involved or otherwise
engaged in, either directly or indirectly, any other employment for gain, profit
or other pecuniary advantage, without prior written consent of Company. At no
time shall Executive engage in any activity that conflicts with the business of
the Company or its affiliates. Nothing set forth in this section 2.2 shall be
construed to prevent Executive from (i) acting as a member of the Board of
Trustees or a member of the Board of Directors of any other corporation or any
organization or entity which is not a competitor of the Company or (ii) devoting
such Executive`s time and attention to philanthropic, charitable, civic,
community or other activities or endeavors as Executive shall reasonably
determine but only to the extent that Executive`s pursuance of any activities or
endeavors described in subparagraph (i) and (ii) above does not materially and
adversely effect the Executive`s ability to perform and discharge Executive`s
duties and objectives to the Company hereunder.
2.3 Except for required travel on Company business or unless
Company agrees otherwise, Executive shall perform his duties and
responsibilities at the Company`s principal executive offices located in the
greater Philadelphia area. The Company shall furnish Executive with office
space, parking, secretarial assistance, personal computer, and such other
facilities and services as shall be suitable to Executive`s position and
adequate for the performance of his duties hereunder. Company shall pay for all
usage, maintenance, and reasonable upgrades of such equipment mentioned in this
section.
2.4 During the term of this Agreement, Executive shall be a
member of the Board of Directors of Company.
3. Compensation.
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3.1 For all duties and responsibilities to be performed and/or
assumed by Executive hereunder, Executive shall be entitled to receive an annual
salary as set forth below ("Base Salary"). The Base Salary, less any sums
required to be withheld by law, shall be payable in equal monthly installments
or such other more frequent regular installments as the Company may, from time
to time, determine. For purposes hereof, Base Salary shall be:
3.1.1 For the twelve-month period commencing with the
date hereof, the Base Salary shall be Three Hundred Thousand Dollars ($300,000).
3.1.2 For each year thereafter, the Base Salary shall
be increased by an amount determined by the Board of Directors but in no event
less than ten percent (10%) after the first year and ten percent (10%) each year
thereafter during the term hereof. Each percentage increase for a particular
year shall be based on the Base Salary for the immediately preceding year.
3.2 Company shall provide to Executive an annual bonus as an
incentive to meet certain performance objectives and milestones. The Board of
Directors shall determine the bonus amount at the conclusion of each of the
Company`s fiscal years during the term of this Agreement, and payable 90 days
thereafter. The bonus can take the form of cash, grants of the Company`s common
stock, and/or grants of options to purchase shares of the Company`s common
stock.
4. Fringe Benefits. Company shall pay for and/or provide for the
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Executive`s participation with the following benefits:
4.1 Executive shall be entitled to four (4) weeks paid
vacation during each full calendar year of this Agreement to be used at the
Executives discretion. Vacation time shall accrue on a pro-rata basis during
each year of this Agreement. Any unused vacation shall be cumulative from year
to year unless otherwise agreed upon by the parties and shall be paid to
Executive upon his separation of employment from the Company.
4.1.1 Executive shall be entitled to paid time off
for all Company Holidays. Such time shall be taken on all Holidays on which the
Company`s Philadelphia office is closed due to a Holiday.
4.1.2 Executive shall be entitled to take a
reasonable amount of paid time off for sick days.
4.2 The Executive and his immediate family shall be entitled
to participate in the Company benefits program when available, which will
include medical insurance. In addition, the Executive shall participate in the
Company`s benefits program for long-term disability insurance, short-term
disability insurance and life insurance. Until such time as the Company
establishes a plan the Company shall pay the executive $3,500.00 on a quarterly
basis towards his medical and insurance and benefits.
4.3 Such other employee benefits maintained by the
Company for its senior executives and key management
employees, including, all 401k, pension, profit
sharing, retirement, stock bonus and stock option
plans, to the extent Executive is eligible to
participate pursuant to the terms and conditions of
such plans.
4.4 Executive shall be reimbursed in a timely manner for
all items of travel, entertainment and miscellaneous
expenses which Executive reasonably incurs in
connection with the performance of his duties
hereunder, provided that the Executive submits to the
Company such statements and other evidence supporting
said expenses as the Company may reasonably require.
4.5 Company shall pay Executive`s premium for an existing or
new term life insurance policy in an amount equal to $2,000,000, payable to any
beneficiary designated by Executive, provided that the amount of such insurance
to be so provided shall be offset by any other life insurance coverage provided
to Executive under any other group or their life insurance programs provided by
Company to Executive and other similarly situated employees. The Executive shall
assume the right to the policy in the event of his termination of employment.
5. Stock Options.
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5.1 As part of Executive`s compensation for services to be
rendered hereunder, Executive shall have the right and option to purchase from
Company voting Common Stock in the Company ("Option"). The total number of
shares available to Executive under this Option is Five Million Seven Hundred
and Eighty-Six Thousand Seven Hundred and Seven Shares (5,786,707) at a purchase
price per share based on the closing price of the Company shares on the
respective dates of vesting in this Agreement ("Option Shares"). The Option
Shares are available for purchase in installments as listed in Column A below
and each installment shall become vested on the corresponding date listed in
Column B, as follows:
Column A Column B
Number of Shares Date Option Shares
Available for Purchase Become Vested
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750,000 Upon the commencement of Executive`s employment
pursuant to the terms of this Agreement
825,000 First anniversary date of this agreement
907,500 Second anniversary date of this agreement
998,250 Third anniversary date of this agreement
1,098,075 Fourth anniversary date of this agreement
1,207,882 Fifth anniversary date of this agreement
In order for the Option Shares to become vested as provided for above, Executive
must be employed by the Company under the terms of this Agreement as of the
vesting date set forth in Column B above.
5.2 Except as otherwise provided for below, the term of the
Option granted shall remain in effect for ten (10) years from the date on which
such Option Shares become granted.
5.3 If the Executive`s employment with the Company terminates
(as defined in Section 6), the Options will be treated as follows:
5.3.1 If the Executive`s employment with the Company
is terminated by the Company for Cause (as defined herein) or the Executive
resigns (other than for Good Reason as set forth in Section 6.4), the
Executive`s right to exercise granted Option Shares shall cease and become null
and void within thirty (30) days of the date employment terminated, except as
otherwise provided in Section 5.3 hereof. All ungranted Option Shares will
terminate immediately as of the date of such termination of employment.
5.3.2 If the Executive`s employment is terminated (i)
Without Cause (as provided for in Section 6.4), (ii) due to his Long Term
Disability (as provided for in Section 6.2) or (iii) as a result of Executive`s
death, then the rights to purchase Option Shares shall be accelerated such that
all ungranted Options become granted immediately. In these circumstances, the
Executive (or Executive`s estate) shall have the full ten years to exercise the
Options, as specified in Section 5.2. The provisions of this Section 5.3.2 shall
survive the termination of Executive`s employment and the termination of this
Agreement.
5.3.3 If the Executive resigns for Good Reason (as
provided for in Section 6.4), all ungranted Options will become granted
immediately, and will also be subject to the 30-day exercise window.
5.4 The purchase price of the Option Shares shall be paid in
full upon the exercise of the Option, and Company shall not be required to
deliver certificates for such Option Shares until payment has been made. In
addition to, and at the time of payment of the exercise price for such Option
Shares, Executive shall be responsible for all federal and state withholding or
other employment taxes applicable to the taxable income of such Executive and
any other fees resulting from the exercise of the Option.
5.5 Each share of Common Stock purchased pursuant to the terms
hereof shall carry all appropriate registration and/or restrictions on sale and
notices as determined from time to time by Company`s securities counsel.
Executive shall cooperate with Company and Company`s counsel in complying with
all applicable securities laws.
5.6 In the event of a merger, acquisition of stock, sale of
assets or similar corporation transaction where Company is not the surviving
corporation, unless the Options (and this Agreement) are assumed by the
surviving corporation, all ungranted Options will be granted immediately so that
Executive will have an opportunity to purchase all of the Option Shares prior to
consummation of the corporation transaction.
6. Termination of Employment. The employment of Executive and Company`s
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liability and obligations hereunder shall terminate as follows:
6.1 Death. This Agreement shall terminate immediately upon the
death of Executive. In such event, Executive`s estate or the person he
designates in writing shall be paid for all of Executive`s unpaid, accrued
vacation time. The Company also shall pay the health insurance premiums (COBRA
or equivalent) for Executive`s dependents for a period of 12 months if such
coverage is desired by Executive`s dependents. Executive`s Options shall
accelerate on his Death.
6.2 Disability. This Agreement shall terminate immediately
upon the Long-Term Disability of Executive. The Long-Term Disability of
Executive shall exist based on the terms as defined in the Company benefits
program for it`s senior executives. If no such benefit exists, Executive shall
be deemed to have a long-term disability if, as a result of a physical or mental
illness or accident, he is unable to carry on his normal duties and
responsibilities on behalf of the Company for a period of six (6) continuous
months. In the event of the long-term disability of Executive, the right to the
Options shall be accelerated so as to allow Executive the right to purchase all
of the Option Shares immediately.
6.3 The Company may discharge the Executive for Cause and
thereby immediately terminate his employment under this Agreement. For purposes
of this Agreement, Company shall have "Cause" to terminate the Executive`s
employment if the Executive, in the reasonable judgment of the Board of
Directors:
6.3.1 Willfully fails to perform any reasonable and
lawful directive of the Company`s Board of Directors and such failure to perform
continues 30 days after Executive has received written notice of such failure.
6.3.2 Materially breaches any of the material
agreements, duties, responsibilities or obligations under this Agreement and
such breach continues for 30 days after Executive has received written notice of
such breach.
6.3.3 Is convicted of a felony or any crime involving
larceny, embezzlement or moral turpitude.
If Executive is terminated for Cause, Executive will be paid for all unpaid,
accrued vacation time.
6.4 Good Reason/Without Cause. In the event that Executive`s
employment is terminated by the Company without Cause for a reason other than
death or Disability, or Executive shall resign for "Good Reason", as defined
below, then, in such event:
6.4.1 Executive`s Base Salary, as defined in Section
3 as then in effect, shall continue to be paid for a period of twelve (12)
months or balance of the original term of the Agreement set forth in Section 1,
whichever is longer ("Payment Period").
6.4.2 Company shall maintain in effect during the
Payment Period, for the continued benefit of the Executive, all of the employee
benefit plans and programs in which the Executive was entitled to participate
immediately prior to the Executive`s termination provided same is possible under
the general terms and provisions of such benefit plans and programs. Moreover,
during the Payment Period the Company shall provide the Executive with such
reasonable administrative and secretarial support services as may be necessary
or appropriate in order to assist Executive in finding new employment or
Executive may select an out-placement service to be paid for by the Company at a
cost not to exceed Five Thousand Dollars ($5,000).
For purposes of this Section 6.4, "Good Reason" shall mean:
(i) An assignment to the Executive of any duties
inconsistent with, or a material change in the nature or scope
of, Executive`s responsibilities, authority or duties
hereunder. For purposes herein, since the Executive shall
report to the Board of Directors of the Company, and the
communications and work environment related to the Executive
and Board of Directors is critical thereto, a change from the
Executive`s participation as a member of the Board of
Directors of the Company unless agreed upon by the Executive
shall be deemed Good Reason for purposes of this Agreement
(ii) The Company materially breaches any of the
material agreements, responsibilities or obligations of the
Company under this Agreement and such breach continues for 30
days after Company has received written notice of such breach.
(iii) Poor health of Executive, or any other
compelling personal circumstance, which, in the mutual
discretion of the Executive and the Board of Directors of the
Company, makes the Executive`s continued employment hereunder
impossible, or inappropriate.
The provisions of this Section 6.4 shall survive the termination of Executive`s
employment and the termination of this Agreement.
6.5 Executive may voluntarily terminate his employment under
this Agreement without Good Reason, as defined in Section 6.4 above, by giving
the Company ninety (90) days prior written notice thereof, and upon the
expiration of such ninety (90) day period, Executive`s employment under this
Agreement shall terminate, and Company shall have no further obligation or
liabilities under this Agreement except to pay the Executive the portion, if
any, that remains unpaid of the Base Salary and unpaid accrued prorated vacation
for the period up to the date of termination. Resignation as defined herein must
be in written form to the Board of Directors, witnessed and signed by the
Executive.
7. Surrender of Books and Records/Confidentiality/Non-Compete.
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7.1. Nondisclosure. Executive acknowledges that the Company
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possesses, and the Information (as defined below) constitutes, distinctive
methods and techniques of doing business and that such methods and techniques
are considered confidential and trade secrets. Executive further recognizes that
disclosures of the Information would result in substantial injury to the
Company. Executive hereby agrees that he will not copy, or remove from premises
occupied by the Company, any Information and all such items shall remain at all
times the sole property of the Company. Executive shall not at any time directly
or indirectly disclose any Information to any person not directly affiliated
with the Company. Executive agrees that he shall not use, either directly or
indirectly, at any time, any Information other than in furtherance of the
interest of the Company. Executive further agrees that the material disclosure
or use of Information by a spouse or member of the immediate family of Executive
(whether or not residing with Executive), or by any entity of which Executive or
any such family member is a partner, equity owners, creditor or otherwise
significant participant, shall be deemed a violation of this Agreement. Upon
termination of his employment, Executive will promptly deliver to the Company
all tangible materials and objects containing Information (including all copies
thereof, whether prepared by Executive or others) which he may possess or have
under his control. The term "Information" shall not include any information
concerning the Company other than any information which can be demonstrated by
Executive (i) to be generally known in the industry or to the public other than
through breach of Employee`s obligations hereunder, (ii) to have been in
Employee`s possession prior to his employment with the Company and not assigned
to the Company, or (iii) to have been disclosed to Executive by an independent
third party not under any obligation of confidentiality.
7.2 Covenant Not to Compete.
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7.2.1 If Executive`s employment with Company is
terminated for Cause (as defined in Section 6.3) or if Executive voluntarily
terminates his employment other than for Good Reason (as defined in Section
6.4), for a period beginning with the termination of Executive`s employment with
the Company and continuing until twelve (12) months from the date of
termination, Executive covenants and agrees that he will not:
(i) solicit, entice or induce any person who
presently is or at any time during the term hereof shall be an
employee or agent of the Company to become employed or
retained by any other person, firm or corporation or to leave
their employment or relationship with the Company, and
Executive shall not approach any such employee for such
purpose or authorize or knowingly approve the taking of such
actions by any other person, or do any other act that may
result in the impairment of the relationship between any such
employee or agent and the Company, or
(ii) compete with, or encourage or assist others to
compete with, or solicit orders or otherwise participate in
business transactions in competition with, the business
engaged in by the Company at any time during the term of
Employee`s employment (unless such business shall have been
abandoned by the Company). The restriction contained in this
subparagraph 7(a)(iii) shall apply worldwide.
For purposes of this Paragraph 7, Executive will be deemed to be
directly or indirectly engaged in such business or line of business if he is
engaged, or if he is actively negotiating or preparing to engage, in an endeavor
or enterprise as a proprietor, partner, joint venturer, stockholder, director,
officer, lender or other provider of financial assistance, manager, employee,
consultant, or agent, or if he otherwise controls such endeavor or enterprise.
Nothing in the foregoing shall prohibit Executive from engaging in any
business that is not in competition with the Company after termination of
employment with the Company, or investing in the securities of any corporation
having securities listed on a national securities exchange or traded on the
NASDAQ automated quotation system, provided that such investment does not exceed
5% of any class of securities of any corporation engaged in business in
competition with the Company, and provided that such ownership represents a
passive investment and that neither Executive nor any group of persons including
him, in any way, either directly or indirectly, manages or exercises control of
any such corporation, guarantees any of its financial obligations, otherwise
takes any part in its business, other than exercising his rights as a
shareholder, or seeks to do any of the foregoing.
7.2.2 Executive acknowledges that the restrictions
contained in this Paragraph 7 are reasonable and necessary to protect the
legitimate business interests of the Company and that the Company would not have
entered into this Agreement in the absence of such restrictions. By reason of
the foregoing, Executive agrees that if he violates any of the provisions of
this Paragraph 7, the Company would sustain irreparable harm and, therefore,
irrevocably and unconditionally (i) agrees that in addition to any other
remedies which the Company may have under this Agreement or otherwise, all of
which remedies shall be cumulative, the Company shall be entitled to apply to
any court of competent jurisdiction for preliminary and permanent injunctive
relief and other equitable relief, (ii) that such relief and any other claim by
the Company pursuant hereto may be brought in the United States District Court
for the Eastern District of Pennsylvania, or if such court does not have subject
matter jurisdiction or will not accept jurisdiction, in any court of general
jurisdiction in Pennsylvania; (iii) consents to the non-exclusive jurisdiction
of any such court in any such suit, action or proceeding, and (iv) waives any
objection which Executive may have to the laying of venue of any such suit,
action or proceeding in any such court. Executive also irrevocably and
unconditionally consents to the service of any process, pleadings, notices or
other papers in a manner permitted by the notice provisions hereof. In the event
that any of the provisions of this Paragraph 7 should ever be adjudicated to
exceed the time, geographic, product or service, or other limitations permitted
by applicable law in any jurisdiction, then such provisions shall be deemed
reformed in such jurisdiction to the maximum time, geographic, product or
service, other limitations permitted by applicable law.
7.2.3 Executive agrees that the Company may provide a
copy of this Paragraph 7 to any business or enterprise (i) which Executive may
directly or indirectly own, manage, operate, finance, join, control or
participate in the ownership, management, operation, financing, or control of,
or (ii) with which he may be connected as an officer, director, employee,
partner, principal, agent, representative, consultant or otherwise, or in
connection with which he may use his name or permit his name to be used;
provided, however, that this provision shall not apply after expiration of the
time periods set forth in Section 7.2.1 or with respect to any activities,
entities or persons excluded by the terms hereof. Executive will provide the
names and addresses of any of such persons or entities as the Company may from
time to time reasonably request.
7.2.4 In the event of any breach or violation of the
restriction contained in Section 7.2.1 above, the period therein specified shall
xxxxx during the time of any violation thereof and that portion remaining at the
time of commencement of any violation shall not begin to run until such
violation has been fully and finally cured.
7.2.6 In the event any court of competent
jurisdiction determines that any of the foregoing provisions is unreasonable or
contrary to law with respect to their time or geographic restriction, or both,
the parties hereto authorize such court to substitute such restrictions as it
deems appropriate without invalidating this Paragraph 7 or this Agreement.
7.2.7 Executive hereby acknowledges and agrees that
the Company`s agreement to enter into this Agreement on the terms and conditions
set forth herein, and the basic compensation, annual bonus and severance
benefits, if any, to be paid to him hereunder, individually constitutes good and
valuable consideration for the covenants set forth in this Section 7.2.
7.3 The provisions of this Paragraph 7 shall survive the
expiration of this Agreement or the termination of this Agreement by either
party.
8. Miscellaneous.
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8.1 Any notice, demand or communication required or permitted
under this Agreement shall be in writing and shall be sufficient when delivered
personally, or three (3) days after mailing by registered or certified mail,
return receipt requested, or the next day if sent by nationally recognized
overnight courier with proof of delivery, in each case postage prepaid,
addressed as follows:
If to the Company:
US Patriot, Inc.
000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxx
If to the Executive:
Xxxxx Xxxxxxxx
000 Xxxxxxx Xxxxx
Xxxx Xxxx, XX 00000
The foregoing addressees may be changed at any time by notice given in the
manner herein provided.
8.2 This Agreement constitutes the entire understanding and
agreement between Company and Executive regarding its subject matter and
supersedes all prior negotiations and agreements, whether oral or written,
between them with respect to its subject matter. This Agreement may not be
modified except by a written agreement signed by the Executive and the Company.
8.3 This Agreement shall be binding upon and inure to the
benefit of the parties and their respective heirs, executors, successors and
assigns, except that this Agreement may not be assigned by the Executive.
8.4 No waiver by either party of any condition or of the
breach by the other of any term or covenant contained in this Agreement, whether
by conduct or otherwise, in any one or more instances shall be deemed or
construed as a further or continuing waiver of any such condition or breach or a
waiver of any other condition, or the breach of any other term or covenant set
forth in this Agreement. Moreover, the failure of either party to exercise any
right hereunder shall not bar the later exercise thereof.
8.5 This Agreement shall be governed by the statutes and
common laws of the Commonwealth of Pennsylvania, excluding its choice of law
statutes or common law.
8.6 The headings of the various sections and paragraphs have
been included herein for convenience only and shall not be construed in
interpreting this Agreement.
8.7 If any provision of this Agreement shall be held invalid
or unenforceable, the remainder of this Agreement shall, nevertheless, remain in
full force and effect. If any provision is held invalid or unenforceable with
respect to particular circumstances, it shall, nevertheless, remain in full
force and effect in all other circumstances.
8.8 This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed by the Executive
and on behalf of the Company by its duly authorized officer on the date first
above written.
ATTEST: US Patriot, Inc.
By: By:
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President
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Secretary Xxxxx Xxxxxxxx
