Exhibit 10.92
EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT (this "Agreement") dated as of April 1, 2001 between
Computone Corporation, a Delaware corporation having its principal place of
business at Suite 100, 0000 Xxxxxxxx Xxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxx 00000
(the "Employer") and E. Xxx Xxxxxx, an individual residing at 000 Xxxxxxxx
Xxxxx, Xxxxxxx, Xxxxxxx 00000-0000 (the "Executive").
WITNESSETH:
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WHEREAS, the Employer desires to employ the Executive, and the Executive
desires to be employed by the Employer, all in accordance with the terms and
subject to the conditions set forth herein; and
WHEREAS, the parties are entering into this Agreement to set forth and
confirm their respective rights and obligations with respect to the Executive's
employment by the Employer;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto, intending to be legally bound hereby,
mutually agree as follows:
1. Employment and Term.
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(a) Effective on the date hereof, the Employer shall employ the
Executive, and the Executive shall be employed by the Employer, as the President
and Chief Operating Officer of the Employer (the "Position"), in accordance with
the terms and subject to the conditions set forth herein for a term (the
"Initial Term") which shall commence on the date hereof and, subject to
paragraphs 1(b) and 1(c) hereof, shall continue for a period of two years
thereafter.
(b) Unless written notice in accordance with this paragraph 1
terminating the Executive's employment hereunder is given by either the Employer
or the Executive not less than 90 days in advance of the expiration of the
Initial Term or any Renewal Term of this Agreement, this Agreement shall be
automatically extended for successive terms of one year (each, a "Renewal
Term"). The Initial Term and each Renewal Term are collectively referred to
herein as the "Term" and, unless otherwise provided herein or agreed by the
parties hereto, all of the terms and conditions of this Agreement shall continue
in full force and effect throughout the Term and, with respect to those terms
and conditions that apply after the Term, after the Term.
(c) Notwithstanding paragraph 1(b) hereof, the Employer, by action of
its Board of Directors (the "Board") and effective as specified in a written
notice thereof to the Executive in accordance with the terms hereof, shall have
the right to terminate the Executive's employment hereunder at any time during
the Term hereof, but only for Cause (as defined herein) or on account of the
Executive's death or Permanent Disability (as defined herein) as of the date of
such death or Permanent Disability.
(i) "Cause" shall mean (A) the Executive's willful and continued
failure substantially to perform his material duties with the Employer, or the
commission by the Executive of any activities constituting a violation or breach
under any material federal, state or local law or regulation applicable to the
activities of the Employer after notice thereof from the Employer to the
Executive and a reasonable opportunity for the Executive to cease such failure,
breach or violation in all material respects, (B) fraud, breach of corporate
opportunity, dishonesty, misappropriation or other intentional material damage
to the property or business of the Employer by the Executive, (C) the
Executive's habitual intoxication or drug addiction or repeated absences other
than for physical or mental impairment or illness, (D) the Executive's admission
or conviction of, or plea of nolo contendere to, any felony that, in the
reasonable judgment of the Board, adversely affects the Employer's reputation or
the Executive's ability to carry out his obligations under this Agreement or (E)
the Executive's non-compliance with the provisions of paragraphs 2(b) or 6
hereof after notice thereof from the Employer to the Executive and a reasonable
opportunity for the Executive to cure such non-compliance.
(ii) "Permanent Disability" shall mean a physical or mental
disability such that the Executive is substantially unable to perform those
duties that he would otherwise be expected to continue to perform and the
nonperformance of such duties has continued for a period longer than 90
consecutive days, provided, however, that in order to terminate the Executive's
employment hereunder on account of Permanent Disability, the Employer must
provide the Executive with written notice of the Board's good faith
determination to terminate the Executive's employment hereunder for reason of
Permanent Disability not less than 30 days prior to such termination, which
notice shall specify the date of termination. Until the specified effective date
of termination by reason of Permanent Disability, the Executive shall continue
to receive compensation at the rates set forth in paragraph 3 hereof less any
payments received by the Executive pursuant to the Employer's short-term
disability insurance coverage. No termination of this Agreement because of the
Permanent Disability of the Executive shall impair any rights of the Executive
under any disability insurance policy maintained by the Employer at the
commencement of the aforesaid 90-day period.
(d) Any notice of termination of this Agreement by the Employer to
the Executive or by the Executive to the Employer shall be given in accordance
with the provisions of paragraph 10 hereof.
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2. Duties of the Executive.
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(a) Subject to the ultimate control and discretion of the Board, the
Executive shall serve in the Position and perform all duties and services
commensurate with the Position. Throughout the Term, the Executive shall perform
all duties reasonably assigned or delegated to him under the By-laws of the
Employer or from time to time by the Board consistent with the Position. Except
for travel normally incidental and reasonably necessary to the business of the
Employer and the duties of the Executive hereunder, the duties of the Executive
shall be performed in the greater Atlanta, Georgia metropolitan area.
(b) The Executive shall devote substantially all of the Executive's
business time and attention to the performance of the Executive's duties
hereunder and, during the Term, the Executive shall not engage in any other
business enterprise which requires any significant amount of the Executive's
personal time or attention, unless granted the prior permission of the Board.
The foregoing provision shall not prevent the Executive's purchase, ownership or
sale of any interest in, or the Executive's engaging (but not to exceed an
average of five hours per week) in, any business which does not compete with the
business of the Employer, the Executive's taking actions permitted by paragraph
6 hereof or the Executive's involvement in charitable or community activities,
provided, that the time and attention which the Executive devotes to such
business and charitable or community activities does not materially interfere
with the performance of his duties hereunder.
(c) The Executive shall be entitled to ten (10) business days of
leave during each calendar year with full compensation for vacation to be taken
at such time or times, as the Executive and the Employer shall mutually
determine. No more than ten (10) days of vacation may be carried over from year
to year. Such vacation shall be separate from time devoted by the Executive to
trade shows, customer visits, seminars and other business-related activities.
3. COMPENSATION. For all services to be rendered by the Executive
hereunder:
(a) BASE SALARY. The Employer shall pay the Executive a base salary
at an annual rate of One Hundred Twenty-Five Thousand Dollars ($125,000) during
the Initial Term and each Renewal Term. Such salary shall be payable in
accordance with the Employer's normal payroll practices as in effect from time
to time.
(b) Incentive Bonus; Draws.
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(i) During each year of the Term, the Executive shall be eligible
to receive an annual incentive bonus (the "Bonus") based upon the Employer's Net
Income during its immediately preceding fiscal year. For the purposes of this
Agreement, "Net Income" with respect to any fiscal year shall mean the
Employer's annual net income as set forth in its audited consolidated financial
statements for such fiscal year, after taking into account the payment or
accrual of the Bonus, if any, payable to the Executive during such fiscal year.
The amount of the Bonus for each fiscal year of the Employer during the Term
shall be computed as follows:
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Amount of Net Income
During Preceding Fiscal Year Amount of the Bonus
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For fiscal year ended March 31, 2002:
At least $0 but not more than $500,000 $37,500
More than $500,000 75,000
For fiscal year ended March 31, 2003:
At least $1,000,000 but not more than $1,500,000 $37,500
More than $1,500,000 75,000
The Executive must be employed by the Employer during an entire fiscal year in
order to be eligible to receive a Bonus for such fiscal year. The Bonus for each
year during the Term shall be paid not later than 90 days after the end of the
Employer's fiscal year with respect to which the Bonus is being paid.
(ii) The Executive shall be permitted to request monthly advances
from the Employer against the Bonus in amounts not to exceed $2,083.33 per month
(collectively, "Draws"). Such Draws must be requested in writing by the
Executive no later than the fifteenth (15th) of each month and are to be paid on
the last day of such month. If at the end of any fiscal year of the Employer,
the Draws received by the Executive during any fiscal year during the Term
exceed the Bonus to which the Executive is entitled (an "Excess"), the Executive
shall be liable to the Employer for such Excess. The Executive may not request
additional Draws if there is an unpaid Excess outstanding. During the Term, any
such Excess is recoverable by the Employer solely from future earned Bonuses.
Following the termination of this Agreement for any reason, the Executive shall
promptly repay to the Employer any Excess that is then outstanding. The Employer
shall be permitted to set off any such Excess against any other amounts owed to
the Executive by the Employer, whether pursuant to this Agreement or otherwise.
(c) STOCK OPTIONS. Effective on the date this Agreement is executed,
the Employer shall grant the Executive options, which shall be non-qualified
stock options, to purchase an aggregate of 100,000 shares of the Employer's
Common Stock with the exercise price per share to be equal to the closing bid
price of one share of the Employer's Common Stock as reported by the OTC
Bulletin Board on the date of such grant. Such options shall have the following
principal terms:
(i) Such options shall become vested and exercisable as follows:
25,000 of such options shall become vested and exercisable on and after the date
hereof; 25,000 of such options shall become vested and exercisable on and after
the first anniversary of the date hereof and 50,000 of such options shall become
vested and exercisable on and after the second anniversary of the date hereof.
None of such options may be exercised after the expiration of ten years from the
date hereof.
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(ii) Such options to the extent not then vested shall terminate
immediately in the event of (A) a termination of this Agreement by the Employer
for Cause or (B) the resignation of the Executive;
(iii)After such options become vested and exercisable they shall
remain exercisable until the earlier of (A) ten years from the date hereof or
(B) one year after the termination of this Agreement by the Employer because of
the Executive's Permanent Disability; and
(iv) The Employer shall prepare and file a Form S-8 registration
statement with the Securities and Exchange Commission as promptly as practicable
after the date hereof but under no circumstances later than the second
anniversary of the date of this Agreement for the purpose of registering the
Common Stock of the Employer issuable upon exercise of such options.
(d) AUTOMOBILE. From and after the date hereof and throughout the
Term, the Employer shall provide the Executive with an automobile allowance of
$600 per month payable semi-monthly irrespective of the Executive's use of such
allowance for an automobile or otherwise. To the extent any of such automobile
benefits are taxable to the Executive, the Executive shall be solely responsible
for such taxes.
(e) OTHER BENEFITS. From and after the date hereof and throughout the
Term, the compensation provided for in this paragraph 3 shall be in addition to
such rights as the Executive may have, during the Executive's employment
hereunder or thereafter, to participate in and receive benefits from or under
the Employer's medical, term life and disability insurance plans and such other
benefit plans the Employer may in its discretion establish for its employees or
executives.
4. EXPENSES. The Employer shall promptly reimburse the Executive for all
reasonable expenses paid or incurred by the Executive in connection with the
performance of the Executive's duties and responsibilities hereunder, in
accordance with the Employer's Travel Policies and Procedures in effect from
time to time.
5. INDEMNIFICATION. The Employer shall indemnify the Executive, to the
fullest extent permitted by law, for any and all liabilities to which the
Executive or his Estate may be subject as a result of, in connection with or
arising out of his service as an employee, an officer or a director of the
Employer hereunder or his service as an employee, officer or director of another
enterprise at the request of the Employer, as well as the costs and expenses
(including attorneys' fees) of any legal action brought or threatened to be
brought against him or the Employer as a result of, in connection with or
arising out of such employment. The Employer will advance professional fees and
disbursements to the Executive in connection with any such legal action,
provided the Executive delivers to the Employer his undertaking to repay any
expenses so advanced in the event it is ultimately determined that the Executive
is not entitled to indemnification against such expenses. Expenses reasonably
incurred by the Executive in successfully establishing the right to
indemnification or advancement of expenses, in whole or in part, pursuant to
this paragraph 5, shall also be indemnified by the Employer. The Executive shall
be entitled to the full protection of any insurance
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policies that the Employer may elect to maintain generally for the benefit of
their respective directors and officers. The rights granted under this paragraph
5 shall survive the termination of this Agreement.
6. Confidential Information and Non-Competition.
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(a) The Executive understands that in the course of his employment by
the Employer, the Executive will receive confidential information concerning the
business of the Employer, which the Employer desires to protect. The Executive
agrees that he will not at any time during or after the period of his employment
by the Employer reveal to anyone outside the Employer, or use for his own
benefit for as long as such information remains confidential, any such
information that has been designated as confidential by the Employer or
understood by the Executive to be confidential, without specific written
authorization by the Employer. Upon termination of this Agreement, and upon the
request of the Employer, the Executive shall promptly deliver to the Employer
any and all written materials, records and documents, including all copies
thereof, made by the Executive or coming into his possession during the Term and
retained by the Executive containing or concerning confidential information of
the Employer.
(b) The Executive agrees with the Employer that during the Term of
this Agreement and for a period of 18 months following the termination or
expiration of the Executive's employment hereunder the Executive will not,
without the prior written consent of the Employer, (i) solicit business or
employment, directly or indirectly, from any person who was a client or customer
of the Employer or an affiliate of the Employer during the twelve month period
preceding the termination or expiration of the Executive's employment, (ii)
induce or attempt to persuade any employee of the Employer to terminate his
employment with the Employer or to enter into the employ of any other business
in competition with the Employer or (iii) engage as an officer, director or
employee of, or a consultant to, or in any way be associated in a management or
ownership capacity with, any corporation, partnership or other enterprise or
venture which conducts a business that is in competition with the business of
the Employer at the time of such termination or expiration, provided, however,
that the Executive may own not more than 4.99% of the outstanding securities, or
equivalent equity interests, of any corporation or firm which is in competition
with the business of the Employer.
(c) The Executive acknowledges that his compliance with the
agreements in paragraphs 6(a) and 6(b) hereof is necessary to protect the good
will and other proprietary interests of the Employer and that he is conversant
with the Employer's affairs, clients and other proprietary information. The
Executive acknowledges that a breach of his agreements in paragraphs 6(a) or
6(b) hereof or his failure to perform such agreements in accordance with their
specific terms will result in irreparable and continuing damage to the business
of the Employer for which there will be no adequate remedy at law, and the
Executive agrees that in the event of any breach of the aforesaid agreements,
the Employer shall be entitled to injunctive relief to enforce specifically
paragraphs 6(a) and 6(b) and to such other and further relief as may be proper.
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(d) The provisions of this paragraph 6 shall survive the termination
or expiration of this Agreement.
7. REPRESENTATION AND WARRANTY OF THE EXECUTIVE. The Executive represents
and warrants that he is not under any obligation, contractual or otherwise, to
any other firm or corporation, which would prevent his entry into the employ of
the Employer or his performance of the terms of this Agreement.
8. ENTIRE AGREEMENT; AMENDMENT. This Agreement contains the entire
agreement between the Employer and the Executive with respect to the subject
matter hereof, and may not be amended, waived, changed, modified or discharged
except by an instrument in writing executed by the parties hereto.
9. ASSIGNABILITY. This Agreement shall be binding upon, and inure to the
benefit of, the Employer and its successors and permitted assigns hereunder. The
rights and obligations of the Employer hereunder may be assigned only to parties
that agree to assume all of the Employer's obligations hereunder. This Agreement
shall not be assignable by the Executive.
10. NOTICE. Any notice which may be given hereunder shall be in writing
and be deemed given when hand delivered and acknowledged upon receipt when
delivered by a nationally recognized overnight delivery service or by registered
or certified mail, return receipt requested, to either party hereto at their
respective addresses stated above, or at such other address as either party may
by similar notice designate, provided that a photocopy of such notice is
dispatched at the same time as the notice is mailed. Copies of such notices also
shall be sent to the Employer's counsel, attention: Xxxxxxxxx X. Xxxxxx, Esq.,
Duane, Morris & Heckscher LLP, 0000 Xxx Xxxxxxx Xxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000 (telecopier no.: 215-979-1213) and to the Employer,
attention: Chief Executive Officer, 0000 Xxxxxxxx Xxxxx Xxxxxxx, Xxxxx 000,
Xxxxxxxxxx, XX 00000 (telecopier no.: 770-625-0011).
11. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement, express or
implied, is intended to confer upon any person or entity other than the parties
any rights or remedies of any nature under or by reason of this Agreement.
12. SUCCESSOR LIABILITY. The Employer shall require any subsequent
successor, whether direct or indirect, by purchase, merger, consolidation or
otherwise, to all or substantially all of the business and/or assets of the
Employer to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Employer would be required to perform it
if no such succession had taken place.
13. ARBITRATION. Any dispute which may arise between the parties hereto
shall be submitted to binding arbitration in Atlanta, Georgia in accordance with
the Rules of the American Arbitration Association; provided that any such
dispute shall first be submitted to the Board in an effort to resolve such
dispute without resort to arbitration, and provided, further, that the Board
shall
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have a period of 60 days within which to respond to the Executive's submitted
dispute, and if the Board fails to respond within said time, or the Executive's
dispute is not resolved, the matter may then be submitted for arbitration.
14. WAIVER OF BREACH. The failure at any time to enforce or exercise any
right under any of the provisions of this Agreement or to require at any time
performance by the other parties of any of the provisions hereof shall in no way
be construed to be a waiver of such provisions or to affect either the validity
of this Agreement or any part hereof, or the right of any party hereafter to
enforce or exercise its rights under each and every provision in accordance with
the terms of this Agreement.
15. SEVERABILITY. The invalidity or unenforceability of any term, phrase,
clause, paragraph, restriction, covenant, agreement or other provision hereof
shall in no way affect the validity or enforceability of any other provision, or
any part thereof, but this Agreement shall be construed as if such invalid or
unenforceable term, phrase, clause, paragraph, restriction, covenant, agreement
or other provision had never been contained herein unless the deletion of such
term, phrase, clause, paragraph, restriction, covenant, agreement or other
provision would result in such a material change as to cause the covenants and
agreements contained herein to be unreasonable or would materially and adversely
frustrate the objectives of the parties as expressed in this Agreement.
16. CONSTRUCTION. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Georgia, without giving effect
to principles of conflict of laws. All headings in this Agreement have been
inserted solely for convenience of reference only, are not to be considered a
part of this Agreement and shall not affect the interpretation of any of the
provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
COMPUTONE CORPORATION
By: /s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
Title: Chairman
Date: 4/1/2001
/s/ E. Xxx Xxxxxx
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E. Xxx Xxxxxx
