EXHIBIT 10.34
[LOGO] XXXXXX TECHNOLOGIES, INC.
XXXXXX TECHNOLOGIES, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of the 9th
day of June 2004, by and between Xxxxxx Technologies, Inc., a Delaware
corporation ("Xxxxxx Delaware") with a business address of 00-00 00xx Xxxxxx,
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000, and Xxxxxx Technologies, Inc., a New York
corporation ("Xxxxxx New York"), also with a business address of 00-00 00xx
Xxxxxx, Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000 (Xxxxxx Delaware and Xxxxxx New York
are hereinafter collectively referred to as "Xxxxxx Technologies," "Xxxxxx" or
"Company"), and Xxxxxxx X. Xxxxxx (hereinafter referred to as "Employee"),
residing at 000 X 00xx Xx, Xxx Xxxx, Xxx Xxxx 00000.
WITNESSETH:
WHEREAS, Xxxxxx Delaware currently employs Employee as its President and
Chief Operating Officer, pursuant to an agreement entered into by and between
Xxxxxx Delaware and Employee as of November 9, 2001 (the "November 2001
Agreement"), and
WHEREAS, Xxxxxx Technologies now wishes to employ Employee as Chief
Executive Officer and President of the Company; and
WHEREAS, Employee consents to be employed as Chief Executive Officer and
President of the Company.
NOW THEREFORE, in consideration of the premises, of the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
I Employment
Xxxxxx Technologies hereby employs Employee, and Employee hereby agrees to
be employed, as Chief Executive Officer ("CEO") and President of the Company,
effective June 15, 2004, upon the terms and conditions herein set forth.
Concurrent with the effectiveness of this Agreement, the November 2001 Agreement
shall expire by mutual agreement of the parties and shall have no further force
and effect, except that all unvested options granted to
Employee under the November 2001 Agreement shall continue to vest in accordance
therewith.
II Duties and Responsibilities
As CEO and President of the Company, Employee shall have such duties,
responsibilities and powers as are customary and appropriate for such offices
including, without limitation, the strategic oversight of the Company; directing
the day-to-day management and operations of the Company; and such other
responsibilities and duties that customarily appertain to the roles of CEO and
President.
Employee agrees to devote his reasonable best diligence and his full time
to the performance of his duties hereunder. Employee's principal place of
employment shall be at the Company's headquarters in Long Island City, New York;
Employee shall travel as reasonably required in the performance of his duties
hereunder.
Employee shall serve as a member of the Company's Board of Directors,
subject to election by the Company's shareholders. As a Director, Employee shall
have all the rights, responsibilities and obligations conferred and/or imposed
upon all employee members of the Board of Directors pursuant to relevant law,
rule and regulation, as well as the Company's Certificate of Incorporation and
By-Laws.
III Term
The term of Employee's employment hereunder shall be three (3) years,
ending on June 15, 2007 (the "Initial Term of Employment"). This Agreement and
Employee's employment thereunder shall automatically renew thereafter for
successive periods of one (1) year, unless the Company or Employee give written
notice of termination to the other at least ninety (90) days before the end of
the then-current term.
IV Compensation & Benefits
Xxxxxx Technologies shall pay Employee, as full consideration for the
services to be rendered hereunder, compensation consisting of the following:
(1) (i) During the first year of the Initial Term of Employment, an annual
base salary of three hundred twenty-five thousand dollars ($325,000);
(ii) During the second year of the Initial Term of Employment, an annual
base salary of three hundred thirty-seven thousand dollars ($337,000); and
(iii) During the third year of the Initial Term of Employment, an annual
base salary of three hundred fifty thousand dollars ($350,000).
(iv) Employee's base salary shall be payable bi-monthly or in accordance
with any other payment schedule as may be adopted generally for the
payment of the Company's payroll.
(2) (i) In the event that the Company's Diluted Earnings Per Share ("Diluted
EPS"), for any fiscal year completed during the term of this Agreement, as
reported on the Company's audited Statement of Operations for such fiscal
year (the "P&L") and subject to clause (iii) below, exceeds the Company's
Diluted EPS for the immediately preceding fiscal year by more than 10%,
Employee shall receive a bonus payment from the Company, calculated as a
percentage of his annual base salary as in effect as of the last day of
the Company's fiscal year to which the bonus relates, in accordance with
the formula set forth in the following table; provided, however, that the
bonus payment shall in no event exceed 75% of such annual base salary:
Bonus Multiplier (as a
Year-Over-Year Diluted EPS Growth percentage of annual salary)*
--------------------------------- -----------------------------
0-9.99% 0%
10.00-25.00% 2.5%
>25.00% 3.0%
(ii) To illustrate the application of the foregoing bonus formula: in the
event that the Company's year-over-year Diluted EPS growth during any
fiscal year completed during the term of this Agreement is 20%, the bonus
payment to Employee shall equal 25% of his then-current annual base
salary; in the event that the Company's year-over-year Diluted EPS growth
during any fiscal year completed during the term of this Agreement is 30%,
the bonus payment to Employee shall equal 52.5% of his then-current annual
base salary; in the event that the Company's year-over-year Diluted EPS
growth during any fiscal year completed during the term of this Agreement
is 40%, the bonus payment to Employee shall equal 75% of his then-current
annual base salary; and in the event that the Company's year-over-year
Diluted EPS growth during any fiscal year completed during the term of
this Agreement is 50%, the bonus payment to Employee shall equal 75% of
his then-current annual base salary.
(iii) For the purposes of calculating the Company's Diluted EPS in
connection with this bonus provision, the Company's "Income Before Income
Taxes" (as reported in the P&L) shall be divided by the "weighted average
common shares (diluted)" (as reported in the P&L); in addition, all
"extraordinary items" (as such term is defined by GAAP, as reasonably
determined by the Audit Committee of the Board of Directors) and
non-operating items (as reasonably determined by the Audit Committee of
the Board of Directors) included in the Company's Income Before Income
Taxes shall be excluded therefrom.
(iv) Any bonus payment shall be made within 15 days after the date on
which the Company's report on Form 10-K, for the year to which the bonus
relates, shall have been filed with the S.E.C.
----------
* The figures listed in the "Bonus Multiplier" column represent percentage
points for each one percent of Diluted EPS growth in excess of 10% or 25%, as
the case may be. For example, EPS growth of 15% will result in a bonus payment
equal to 12.5% of Employee's annual salary.
(3) Four hundred thousand (400,000) employee stock options, to be issued as of
June 9, 2004, pursuant to the terms of the Company's 1996 Stock Option
Plan for Employees and of the Company's standard stock option agreement.
Said stock options shall each have an exercise price of $10.50 (which
equals the closing sale price of the Company's Common Stock on June 9,
2004, as recorded on the Over-The-Counter Bulletin Board); shall vest in
arrears in equal monthly increments, commencing June 2004, over a period
of forty-eight (48) months; and, upon termination of Employee's employment
hereunder, shall immediately expire, in the case of unvested options, or
shall expire ninety (90) days following such termination, in the case of
vested options. (For the purposes of applying the foregoing provision, all
options which are to "immediately vest" subject to Paragraph (5)(ii) of
this Section shall be considered to be vested options.)
(4) Participation in any incentive compensation plan, pension or
profit-sharing plan, annuity or group insurance plan previously adopted by
the Company or which may be adopted by the Company at some future date, on
terms and in amounts no less favorable than provided for other Xxxxxx
employees similarly employed. Notwithstanding this provision, Employee
shall not be granted any stock options pursuant to the Company's 1996
Employee Stock Option Plan, other than those granted under Section IV (3)
of this Agreement.
(5) Immediate vesting of the Company stock options issued to Employee
hereunder and under the November 2001 Agreement in the event that, and at
such time as: (i) Xxxxxx Technologies has a change in control or is
acquired by another entity or company. (For purposes of this Agreement,
"control" is defined as any event or circumstance that would require
disclosure under Item 1 or 5.01 of S.E.C. Form 8-K or any comparable
requirement of the Securities and Exchange Commission.); or (ii)
Employee's employment hereunder is terminated by the Company without
cause, but only if such termination takes place following a fiscal year in
which the Company's year-over-year Diluted EPS growth, calculated pursuant
to Section IV (2) above, was twenty percent (20%) or greater.
(6) Employment benefits generally provided to Xxxxxx employees, including
medical and dental insurance, on terms and in amounts no less favorable
than provided for other Xxxxxx employees similarly employed.
(7) Twenty (20) business days per year for vacation time, and five (5)
business days per year for sick or personal leave, during which times
Employee will be compensated the normal pro-rated portion of his base
salary.
(8) Reimbursement for all expenses incurred by Employee in the ordinary course
of his performance of duties hereunder and submitted by him with
supporting documentation to the Company's accounting department, in terms
no less favorable than provided for other Xxxxxx employees similarly
employed.
(9) A leased automobile (up to a maximum monthly lease payment of $750 per
month) throughout the term of Employee's employment with the Company.
Additionally, the Company shall make full payment of automobile insurance
premiums and operating expenses relating to said automobile.
V Termination For Cause / Cure Period
The Company shall have "cause" to terminate this Agreement in the event
that: (i) a majority, plus at least one, of the members of the Company's Board
of Directors, excluding Employee, determines that (a) the Employee has committed
an act of fraud against the Company, or (b) the Employee has committed an act of
malfeasance, recklessness or gross negligence against the Company that is
injurious to the Company or its customers; or (ii) the Employee has materially
breached the terms of this Agreement; or (iii) the Employee is indicted for, or
convicted of, or pleads no contest to, a felony or a crime involving the
Employee's moral turpitude. If Employee's termination for cause hereunder is
based upon Employee's material breach of the terms of this Agreement, then
Employee shall be given 30 days' notice of such termination and shall have the
opportunity to cure such material breach during said 30-day period.
VI Severance
In the event that Employee is terminated by the Company for "cause,"
pursuant to the terms of Section V above, he shall receive no severance payments
from the Company.
In the event that Employee's employment hereunder is terminated by the
Company without cause, he shall continue to receive the annual base salary set
forth in Section IV (1) above for a period of twelve (12) months following such
termination, and, if applicable, a Prorated Bonus (as defined below), even if
such termination of employment is made effective at the end of the Initial Term
of Employment or of any renewal term pursuant to Section III hereof or
otherwise, provided that Employee does not violate any provision of Section VII
or VIII during such 12-month severance period. For this purpose, "Prorated
Bonus" shall mean a bonus calculated pursuant to Section IV (2) above, except
that (i) the relevant Diluted EPS growth shall be determined by comparing the
year-to-date Diluted EPS reported on the Company's Form 10-Q filed with the SEC
for the quarter ending closest to (whether before or after) the effective date
of such termination with the Diluted EPS reported in the Company's Form 10-Q for
the counterpart period of the prior fiscal year, (ii) the salary amount being
multiplied by the relevant Bonus Multiplier shall be prorated based on the
number of days elapsed from June 15 most recently preceding such effective date
to such effective date, and (iii) such bonus shall be paid within 15 days after
the filing of the Form 10-Q first mentioned above.
VII Non-Disclosure
(1) Employee recognizes that the Company possesses and will continue to
possess non-public information that has been created, discovered,
developed, or otherwise become known to it, and/or in which property
rights have been assigned or otherwise conveyed to
it, which information has commercial value in the business in which it is
engaged or may become engaged. All of the aforementioned information is
hereinafter called "Proprietary Information."
(2) By way of illustration, but not limitation, Proprietary Information
includes trade secrets, processes, structures, formulas, data, know-how,
improvements, inventions, product concepts, techniques, marketing plans,
strategies, forecasts, customer lists and information about the Company's
employees and/or consultants.
(3) At all times, both during Employee's employment by the Company and after
its termination, Employee shall keep in confidence and trust all
Proprietary Information, and Employee shall not use or disclose any
Proprietary Information or anything directly relating to it without the
written consent of a majority of the members of the Board of Directors of
the Company, except as may be necessary in the ordinary course of
Employee's performing his duties as an employee of the Company and only
for the benefit of the Company.
VIII Non Competition and Non Solicitation
During the period of Employee's employment by the Company and for a period
of twelve months following the termination of the Employee's Employment with the
Company, Employee shall not: (i) engage or become interested in any way (whether
as an owner, stockholder, partner, lender, investor, director, officer,
employee, consultant or otherwise) in any activity, business or enterprise,
located within the geographical area of the United States or Canada, that is
competitive with any significant part of the business conducted by the Company
or contemplated to be conducted by it (except that passive ownership of not more
than 5% of the outstanding securities of any class of any corporation that are
listed on a national securities exchange or traded in the over-the-counter
market shall not be considered a breach of this Section); or (ii) solicit or
hire for any purpose any employee of the Company, or any employee who has left
such employment within the previous six months.
IX Miscellaneous Provisions
(1) Acknowledgments and Affirmations. Employee recognizes, understands, agrees
and acknowledges that the Company has a legitimate and necessary interest
in protecting its goodwill and Proprietary Information. Employee further
affirms, represents, and acknowledges that in the event of Employee's
termination of employment with the Company, Employee's experience and
capabilities are such that the enforcement of this Agreement will not
prevent him from obtaining employment in another line of business
different from that carried on by the Company and permitted under this
Agreement. Employee further affirms, represents and acknowledges that
Employee has received good and valuable consideration for entering into
this Agreement.
(2) Remedies for Breach. Employee agrees that any breach of this Agreement by
Employee would cause irreparable damage to the Company and that, in the
event of such breach, the Company shall have, in addition to any and all
remedies at law, the
right to an injunction, specific performance or other equitable relief to
prevent or redress the violation of Employee's obligations hereunder.
(3) Separability. If any provision hereof shall be declared unenforceable for
any reason, such unenforceability shall not affect the enforceability of
the remaining provisions of this Agreement. Further, such provision shall
be reformed and construed to the extent permitted by law so that it would
be valid, legal and enforceable to the maximum extent possible.
(4) Applicable Law. Any dispute arising under or related in any manner to this
Agreement or to Employee's employment by the Company or to the termination
of said employment shall in all respects be governed by, adjudicated,
construed and enforced in accordance with the laws of the State of New
York.
(5) Jurisdiction and Venue. Employee irrevocably and unconditionally submits
to the exclusive jurisdiction of any United States federal, state or city
court sitting in New York in any action or proceeding relating in any
manner to this Agreement or to Employee's employment by the Company or to
the termination of said employment. Further, Employee irrevocably and
unconditionally agrees that all claims relating in any manner to this
Agreement or to Employee's employment by the Company or to the termination
of said employment may be heard and determined in any such court and
waives any objection Employee may now or hereafter have as to venue of any
such action or proceeding brought in such court or the fact that such
court is an inconvenient forum.
XXXXXX TECHNOLOGIES, INC. XXXXXXX X. XXXXXX
A Delaware Corporation
000 X 00xx Xxxxxx
00-00 00xx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
By: /s/ Xxxxxxx X. Xxxx /s/ Xxxxxxx X. Xxxxxx
----------------------------- ------------------------------
(signature)
Name: Xxxxxxx X. Xxxx
Title: Chairman of the Board
XXXXXX TECHNOLOGIES, INC.
A New York Corporation
00-00 00xx Xxxxxx
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
By: /s/ Xxxxxxx X. Xxxx
-----------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman of the Board
