EMPLOYMENT AGREEMENT
AGREEMENT, dated as of July 1, 1996, by and between OBJECTSOFT
CORPORATION, a Delaware corporation with offices at Continental Plaza III, 000
Xxxxxxxxxx, Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 (hereinafter referred to as the
"Company"), and XXXXX X. X. XXXXX, an individual residing at 000 Xxxxx Xxxxxx
Xxxxx, Xxxxxxx, Xxx Xxxxxx 00000 (hereinafter referred to as the "Executive").
W I T N E S S E T H :
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WHEREAS, the Company and the Executive mutually desire to enter into
an Employment Agreement with respect to the Executive's employment by the
Company;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration the receipt of which is
hereby acknowledged, the Company and the Executive hereby agree as follows:
1. EMPLOYMENT OF EXECUTIVE.
The Company hereby employs the Executive as its Chairman
and Co-Chief Executive Officer. Executive hereby accepts such employment with
the Company upon the terms and conditions hereinafter set forth. In his capacity
as Chairman and Co-Chief Executive Officer of the Company, Executive shall have
all of the customary powers, responsibilities and authorities of chief executive
officers of corporations of the size, type and nature of the Company, as they
exist from time to time, including, without limitation, supervision of the
preparation of an operating budget with respect to each fiscal year of the
Company ("Fiscal Year"), which budget (the "Annual Budget") (i) shall set forth
target goals for the Company for each such Fiscal Year and (ii) shall be
submitted to the Board of Directors of the Company for its approval. Executive's
principal office shall be at the principal executive offices of the Company in
Hackensack, New Jersey or such other office in Northern New Jersey to which the
executive offices shall be relocated.
2. SERVICES TO BE RENDERED.
The Executive will devote his full business time and
efforts to the business and affairs of the Company and shall not, during the
term of this Agreement, be engaged in any other business activity that
interferes, in a material manner, with the Executive's ability to comply with
the provisions of this Agreement. The Executive will use his best efforts to
promote the interests of the Company. Notwithstanding the foregoing, the
Executive shall not be precluded from devoting such time to his personal
financial affairs as shall not substantially interfere with his duties
hereunder.
3. TERM.
The term of this Agreement shall commence as of July 1,
1996, and shall continue to and including December 31, 2001 (the "Employment
Period"), unless sooner terminated as hereinafter provided. The Employment
Period may be extended by the mutual agreement of the Company and the Executive.
4. COMPENSATION.
(a) The Company will compensate the Executive for the
services to be rendered by the Executive hereunder at the per annum rate of Two
Hundred EightThousand Dollars ($208,000) from July 1, 1996 through December 31,
2001 (the "Base Compensation"), payable in accordance with the Company's
customary payroll practices. Additionally, the Base Compensation may be
increased annually as determined by the Board of Directors of the Company.
(b) In addition to the compensation provided in Section
4(a) above, the Company agrees to pay the Executive an annual bonus payment (the
"Basic Bonus Payment") for each of the Fiscal Years during the Employment Period
equal to five percent (5%) of the Company's annual EBITDA (as defined below) for
the subject Fiscal Year. Executive shall be paid his annual Basic Bonus Payment
within 100 days after the end of the subject Fiscal Year. The term "EBITDA"
shall mean, with respect to any subject Fiscal Year, (i) the Company's pre-tax
income for the subject Fiscal Year (determined in accordance with generally
accepted accounting principles, consistently applied), plus (ii) all amounts
deducted for depreciation, amortization and interest (including original issue
discount). The determination of EBITDA for each subject Fiscal Year shall be
made by the independent public accountants then employed by the Company based
upon the audited financial statements of the Company. Such determination shall
be delivered to the Company and Executive within 90 days after the end of the
subject Fiscal Year and shall be conclusive and binding upon the Company and
Executive. In addition, the Board of Directors will consider on an annual basis
granting the Executive an additional bonus based upon the increase in the
Company's Gross Revenues for the current Fiscal Year over the prior Fiscal
Year's Gross Revenues, taking into account any increase in expenses (the
"Additional Bonus Payment", and together with the Basic Bonus Payment
hereinafter referred to as the "Bonus Payment"). The term "Gross Revenues" shall
mean the revenues of the Company for each subject Fiscal Year as reported in the
audited financial statements of the Company for such Fiscal Year as prepared by
the independent public accountants then employed by the Company. The Company
may, from time to time during any fiscal year, make payments to the Executive
against the amount it estimates to be the Bonus Payment which the Executive is
anticipated to receive with respect to such fiscal year.
(c) With respect to Executive's employment hereunder in
the 1996 Fiscal Year, his Bonus Payment shall be equal the product of the amount
which would otherwise be payable to him in respect of such Fiscal Year pursuant
to the preceding subparagraph (b) multiplied by a fraction of which the
numerator is the number of calendar days from July 1 of the 1996 Fiscal Year to
the end of such Fiscal Year and the denominator is 365. Except as otherwise
specified below in
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this Agreement, in the event of the termination of Executive's employment
hereunder for any reason prior to the end of a Fiscal Year, his Bonus Payment in
respect of such Fiscal Year shall be reduced to equal the product of the amount
which would otherwise be payable to him in respect of such Fiscal Year pursuant
to the preceding subparagraph (b) multiplied by a fraction of which the
numerator is the number of calendar days from the beginning of such Fiscal Year
to the date of termination of Executive's employment hereunder and the
denominator is 365.
(d) If prior to December 31, 2001 Executive's employment
is terminated by the Company other than for cause (as defined in Section 8
hereof) and other than due to Executive's death or total disability (as defined
in Section 7(a) hereof) or if Executive terminates his employment for Good
Reason (as defined in Section 4(e) hereof) prior to December 31, 2001, (i)
Executive shall be entitled to receive in cash a lump sum payment from the
Company (the "Severance Payment") payable within 10 days of such termination,
the product of:
(A) the sum of (I) Executive's then current
Base Compensation and (II) the annual Bonus Payment for
the prior Fiscal Year, multiplied by
(B) the greater of (I) the number of calendar
months from the end of the month during which the
termination occurs through December 31, 2001, divided by
12, or (II) one.
and (ii) Executive shall:
(A) be entitled to receive, within 10 days of
the date of termination, in cash a lump sum equal to (I)
any compensation payments deferred by Executive, together
with any applicable interest or other accruals thereon;
(II) any unpaid amounts, as of the date of such
termination, in respect of the Bonus Payment for the
Fiscal Year ending before the Fiscal Year in which such
termination occurs; (III) any payments of Executive's Base
Compensation earned through the date of the termination of
Executive's employment but unpaid by the Company prior to
the termination date; and (IV) an amount in respect of the
Bonus Payment for the Fiscal Year in which such
termination occurs calculated as if Executive had been
employed for the full Fiscal Year and determined under
Section 4(b) hereof on the basis of the Company's EBITDA
for such Fiscal Year being equal to the sum of (x) the
Company's actual EBITDA for the period from the beginning
of such Fiscal Year through the end of the month preceding
the date of termination plus (y) the Company's projected
EBITDA for the remainder of such Fiscal Year as set forth
in the then current version of the Annual Budget for such
Fiscal Year, divided by 12 and multiplied by the number of
months from the beginning of the Fiscal Year in which the
termination of the Executive's employment occurred;
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(B) for the period from the date of termination
of Executive's employment until December 31, 2001, to the
extent allowable under applicable laws and the terms of
such plans, continue to be covered under and participate
in the Company's employee benefit programs, plans and
practices described in Section 5 hereof or under such
other plans of the Company which provide for equivalent
coverage (on an after-tax basis);
(C) have such rights to payments under
applicable plans or programs, including but not limited to
those described in Section 5 hereof, as may be determined
pursuant to the terms of such plans or programs, subject
to the terms of each such agreement; and
(D) be entitled to receive, to the extent
unpaid, reimbursement for all expenses incurred for the
benefit of the Company during the term of his employment
under this Agreement.
(e) For purposes of this Agreement, "Good Reason" shall
mean the occurrence of any of the following events without Executive's express
prior written consent:
(i) the assignment to Executive by the Company
of duties inconsistent with Executive's positions, duties,
responsibilities, titles and offices as set forth in
Section 1 hereof, or any material reduction by the Company
of Executive's duties or responsibilities or any removal
of Executive from or any failure to elect or re-elect
Executive to any of such positions (including but not
limited to a failure to elect or re-elect Executive as a
director of the Company or the removal of Executive as the
Chairman or Co-Chief Executive Officer of the Company),
except in connection with the termination of Executive's
employment for Cause, as a result of Executive's total
disability (as defined in Section 7(a) hereof), as a
result of Executive's death or by Executive other than for
Good Reason;
(ii) a reduction by the Company in Executive's
Base Compensation or Bonus Payment as in effect at the
commencement of employment hereunder or as the same may be
increased from time to time during the term of this
Agreement;
(iii) a relocation of the Company's principal
executive offices to a location outside of Northern New
Jersey or the Company's requiring Executive to be based
anywhere other than Northern New Jersey, except for
required travel on the Company's business to an extent
substantially consistent with Executive's business travel
obligations on the Commencement Date (as defined below),
or any adverse change in the office assignment or
secretarial and other support accorded to Executive on the
Commencement Date;
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(iv) a failure by the Company to continue in
effect any benefit or compensation plan or stock option
plan (including any pension, profit sharing, bonus, life
insurance, health, accidental death or dismemberment or
disability plan) existing on the commencement of the
Employment Period (the "Commencement Date") and in which
Executive participates after the Commencement Date (and,
in the case of plans adopted after the Commencement Date
and providing a type of benefit not provided by the
Company on the Commencement Date, at the respective dates
of adoption of such plans) without providing for or
establishing plans or arrangements providing Executive
with substantially similar benefits, or the taking of any
action by the Company which would adversely affect
Executive's participation in or reduce Executive's
benefits under any of such plans;
(v) the taking of any action by the Company
which would deprive Executive of any material fringe
benefit enjoyed by Executive on the Commencement Date (or
in the case of a fringe benefit not provided to Executive
by the Company on the Commencement Date, at the respective
dates of first providing such fringe benefits to any
management personnel), or the failure by the Company to
provide Executive with the number of paid vacation weeks
to which Executive is entitled hereunder;
(vi) the failure by the Company to obtain the
specific assumption of this Agreement by any successor or
assign of the Company or any person acquiring a
substantial portion of the assets of the Company or,
following any such assumption, assignment or acquisition
by an entity other than an affiliate of the Company, the
occurrence of any event which Executive believes, acting
in good faith, will impair his duties, responsibilities or
benefits under this Agreement;
(vii) any material breach by the Company of any
provision of this Agreement; or
(viii) the occurrence of a Change of Control
(as hereinafter defined).
(f) For purposes of this Agreement, a Change in Control
shall result from the transfer or issuance, after the date hereof, to any
person(s) and their affiliates by the Company or the then existing holders of
Company securities of such securities the ownership of which, when aggregated
with any other securities held by such person(s) and their affiliates, results
in the ownership or the beneficial ownership of 50% or more of the Common Stock
of the Company either directly or indirectly. Notwithstanding the foregoing, for
purposes of this Section 4(f), a transfer by the Executive and/or Xxxxxx Xxxxxx,
without the approval of a majority of the Board of Directors of the Company,
shall not be considered in determining whether or not a Change of Control shall
have occurred.
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(g) Notwithstanding the foregoing, if the Executive would
be subject to an excise tax under Section 4999 of the Internal Revenue Code of
1986, as amended (the "Code") with respect to the payments required pursuant to
Section 4(b) (taking into account all "parachute payments" (within the meaning
of Section 280G of the Code) payable to Executive whether pursuant to this
Agreement or otherwise), the amount payable pursuant to Section 4(d) hereof
shall be reduced by the smallest amount necessary to avoid such excise tax. Any
such reduction shall first be made to the Severance Payment. The Severance
Payment enumerated in Section 4(d) shall be computed at "present value", as that
term is defined in the Code.
(h) A Severance Payment shall be paid to Executive 10 days
following the Executive's termination of his employment hereunder. The dollar
amount of any Severance Payment payable to Executive shall be calculated as of
the date of his termination.
(i) In the event of an action or dispute between the
Executive and the Company with respect to the compensation payments to be made
to the Executive pursuant to this Section, if the Executive shall prevail in
such actions, by court decision, arbitration, settlement or otherwise, the
Company shall be obligated to make a charitable contribution in the amount of
$300,000.00 to a public or private charitable organization which shall be
designated by the Executive.
5. BENEFITS.
(a) The Executive shall be entitled to participate in the
regular bonus (including the Company's Key Employee Bonus Plan as in effect from
time to time), pension, profit-sharing, health, life, disability and other
benefit programs of the Company in effect from time to time on the same basis
that other senior executive officers of the Company participate therein. The
Executive shall be entitled, for the term hereof, to a reasonable annual
vacation generally in accordance with the policies of the Company in effect from
time to time, but not less than four (4) weeks per annum. The Executive shall be
entitled to a car leased by the Company for his use substantially equivalent in
cost to an Acura Legend and a cellular telephone, including any monthly costs
associated with the telephone. The Executive shall also be entitled to a modern
state-of-the art lap top computer and to a high-speed connection to the
Company's local area network, an Internet connection, a telefax line and machine
(or computer) at his residence.
(b) Without limiting the foregoing benefits to which
Executive shall be entitled as referred to in subparagraph (a) above, Executive
shall receive the following:
(i) The benefits of an employment disability
policy providing benefits up to an amount equal to his Base Compensation, to the
extent available to the Company at a reasonable cost, with any and all premiums
therefor being payable by the Company. The Company will also pay to the
Executive an amount equal to the income taxes (federal, state and local)
Executive will be presumed to pay (at highest marginal rates) on the premiums
paid for such disability insurance (not taking into account any deductions,
losses or personal circumstances of Executive); and
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(ii) The ownership of a term life insurance
policy (with any and all premiums therefor being payable by the Company), the
beneficiaries of which may be as directed by the Executive and the death benefit
for which is not less than Two Million Dollars ($2,000,000).
6. EXPENSES.
The Company shall reimburse the Executive against
appropriate vouchers or other receipts for business expenses reasonably incurred
by him in the performance of his duties pursuant to the terms hereof.
7. DEATH AND DISABILITY.
(a) In the event of the death of the Executive during the
Employment Period, the Executive's employment hereunder shall automatically
terminate, and in the event of the total disability of the Executive, the
Executive's employment hereunder may terminate at the option of the Board of
Directors of the Company. Upon any such termination in accordance with this
Section 7 the Executive, or the estate of the Executive (as the case may be),
shall be entitled to receive his Base Compensation and Bonus Payment, in each
case in the amount thereof which accrued to the date of death or total
disability. The Bonus Payment shall be in each case calculated as if Executive
had been employed for the full Fiscal Year and determined under Section 4(b)
hereof on the basis of the Company's EBITDA for such Fiscal Year being equal to
the sum of (x) the Company's actual EBITDA for the period from the beginning of
such Fiscal Year through the end of the month preceding the date of termination
plus (y) the Company's projected EBITDA for the remainder of such Fiscal Year as
set forth in the then current version of the Annual Budget for such Fiscal Year,
divided by 12 and multiplied by the number of months from the beginning of the
Fiscal Year in which the termination of the Executive's employment occurred to
the date of death or total disability of the Executive.
For purposes of this Agreement, "total disability" shall
mean the Executive's incapacity due to health reasons (supported by the opinion
of a physician mutually satisfactory to both the Executive and the Board of
Directors of the Company) which prevents the Executive from substantially
performing his duties hereunder for a period of 180 consecutive days.
8. CAUSE.
The Board of Directors of the Company may terminate the
Executive's employment hereunder, by a written notice setting forth the "Cause"
for such termination.
For purposes of this Agreement, the term "Cause" shall
mean: (a) the failure of the Executive to in any material respect perform his
duties pursuant to Section 2 hereof as determined by such Board of Directors,
which failure is not cured within twenty (20) days following notice thereof to
the Executive, (b) a breach in any material respect by the Executive of any
other material provision hereof, or (c) if the Executive shall be convicted of,
or plead guilty or nolo
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contendere to, a felony relating to a crime involving moral turpitude or shall
have committed acts of fraud or embezzlement against the Company. Upon any such
termination, the Executive shall be entitled to receive his Base Compensation
and his Bonus Payment prorated in accordance with Sections 4(b) and 4(c) of this
Agreement.
9. NON-COMPETITION.
(a) During the period of Executive's employment by the
Company (the "Non-Competition Period"), the Executive agrees that he will not,
anywhere in the United States, directly or indirectly enter into or participate
in (whether as owner, partner, shareholder, officer, director, salesman,
consultant, employee or otherwise) any business which is in competition with the
Business or any other material business in which the Company or any of its other
subsidiaries may engage after the date hereof, without having first obtained the
Company's prior written consent; provided, however, that (a) the Company
specifically acknowledges and agrees that the Executive may own up to 5% of the
outstanding equity securities of any entity that is subject to the public
reporting requirements of the Securities Exchange Act of 1934, as amended.
(b) The Non-Competition Period shall be extended to
include the period of one-year following termination of Executive's employment
(i) by the Company for "Cause", or (ii) by the Executive (if other than for Good
Reason).
(c) The Executive shall not at any time within a period of
one (1) year following the termination of his employment, without the prior
written consent of the Company, directly or indirectly (i) solicit, request,
cause or induce any person who is at the time, or twelve months prior thereto
had been, an Executive of or a consultant to the Company, to leave the employ of
or terminate his relationship with the Company, or (ii) solicit the employment,
engagement or association with, or endeavor to entice away from the Company to
any business that is competitive with any of the businesses engaged in by the
Company during the time that the Executive, any such person.
10. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) Subject in all respects to the provisions of, and as
contemplated by, clause (a) of Section 9 hereof, the Executive shall at all
times, both during and after the Employment Period, hold in a fiduciary capacity
for the benefit of the Company and each of its subsidiaries, and shall not use
or disclose or permit the use of or the disclosure to any third party, any and
all trade secrets, information, knowledge and data not generally known to, or
easily obtainable by, the public that he may have learned, discovered,
developed, conceived, originated or prepared during or as a result of his
relationship with the Company or any of its subsidiaries (as a stockholder or
otherwise) or any predecessor-in-interest to any of the Company's or any of its
subsidiaries' business or assets with respect to the operations, business, New
Technology, affairs, products, technology or services of the Company or any of
its subsidiaries.
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(b) The Executive acknowledges that any breach of the
provisions of Sections 9 and 10 hereof can cause irreparable harm to the Company
and its subsidiaries for which the Company and its subsidiaries would have no
adequate remedy at law. In the event of a breach or threatened breach by the
Executive of any of such provisions, in addition to any and all other rights and
remedies it may have under this Agreement or otherwise, the Company or any of
its subsidiaries, as the case may be, may immediately seek any judicial action
it deems necessary, including, without limitation, temporary and preliminary
injunctive relief.
11. RIGHTS TO TECHNOLOGY.
(a) The property rights in and to all items of New
Technology, as defined below herein, shall be deemed to have been created for
the Company as work for hire and are and shall be the sole and exclusive
property of the Company, and the Executive does hereby agree that he will make
full and prompt disclosure to the Company of any and all such New Technology.
For the purposes of this Agreement, the term "New Technology" shall mean each
and every invention, discovery and development, device, design, apparatus,
practice, method, product, item of know-how, improvement, process, item of
technical knowledge, formula, trade secret, trade name and modification, whether
or not patentable, trademarkable or copyrightable, which were made, developed or
first reduced to practice by the Executive (whether acting alone or with others)
during the term of his employment hereunder (the "Technology Term"), and which
relate primarily to the Company's business.
(b) During the Technology Term, and at any time and from
time to time thereafter, the Executive shall (i) execute all documents requested
by the Company to assign to the Company all of his right, title and interest in
and to any New Technology and to confirm the complete ownership by the Company
of such New Technology, (ii) execute any and all documents requested by the
Company for filing and prosecuting applications for patents, design patents,
trademarks or copyrights for or with respect to the New Technology, and (iii)
render to the Company all assistance that it may request, including the giving
of testimony in any suit, action or proceedings before any court of appropriate
jurisdiction, including, but not limited to, any governmental or
quasi-governmental agency or other regulatory body, in order to obtain, maintain
and protect the Company's rights and ownership interests with respect to the New
Technology.
12. NOTICE.
Any notice required hereunder shall be delivered by hand,
sent by facsimile, or sent by registered or certified mail, addressed to the
other party hereto at its address set forth above or at such other address as
notice thereof shall have been given in accordance with the provisions of this
Section 12. Any such notice shall become effective (a) when mailed, three days
after having been deposited in the mails, postage prepaid, and (b) in the case
of delivery by hand or facsimile, upon delivery.
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13. AGREEMENT; AMENDMENT.
This Agreement supersedes any prior agreements or
understandings, oral or written, between the parties hereto and represents their
entire understanding and agreement with respect to the subject matter hereof.
This Agreement can be amended, supplemented or changed, and any provision hereof
can be waived, only by written instrument making specific reference to this
Agreement which is signed by the party against whom enforcement of any such
amendment, supplement, modification or waiver is sought. Any waiver of any
breach of this Agreement shall not be construed to be a continuing waiver or
consent to any subsequent breach by any party hereto.
14. WAIVER NOT CONSENT.
Any waiver of any breach of this Agreement shall not be
construed to be a continuing waiver or consent to any subsequent breach by any
party hereto.
15. SEVERABILITY.
In the event of the invalidity or unenforceability of any
one or more provisions of this Agreement, such illegality or unenforceability
shall not affect the validity or enforceability of the other provisions hereof
and such other provisions shall be deemed to remain in full force and effect.
16. ASSIGNMENT; BINDING EFFECT.
This Agreement is not assignable without the prior written
consent of each party hereto. This Agreement shall be binding upon and shall
inure to the benefit of the Company and the Executive and their respective
heirs, legal representatives, successors and assigns.
17. SECTION HEADINGS.
The Section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
18. GOVERNING LAW.
This Agreement shall be construed and governed in
accordance with the laws of the State of New York.
19. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the day and year first above written.
OBJECTSOFT CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx, President
/s/ Xxxxx X. X. Xxxxx
---------------------------------
Xxxxx X. X. Xxxxx
Agreed to by the Compensation Committee of the Board of Directors:
/s/ Xxxxxx X. Xxxx
-----------------------------
Xxxxxx X. Xxxx
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