EMPLOYMENT AGREEMENT
Exhibit
10.1
Execution
Copy
This
EMPLOYMENT AGREEMENT (this “Agreement”) is
entered into as of the 1st
day of March, 2010 (the “Effective Date”), by
and between Emtec, Inc., a Delaware corporation (the “Company”) and Xxxxx
X. Xxxxxx (the “Executive”).
WITNESSETH
THAT:
WHEREAS,
the parties desire to enter into this Agreement pertaining to the employment of
the Executive by the Company.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
below and intending to be legally bound, it is hereby covenanted and agreed by
the Executive and the Company as follows:
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1.
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Employment; Position
and Responsibilities:
Term.
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(a)
During the Agreement Term (as defined below), and subject to the terms of this
Agreement, the Executive shall be employed by the Company and shall occupy the
positions of Executive Vice President and head of Public Sector. The Executive
agrees to serve in such positions or in such other executive offices or
positions with the Company or a Subsidiary (as defined below), as shall from
time to time be determined by the Company’s
Board of Directors (the “Board”). The
Executive represents that his employment with the Company does not violate any
other agreement to which he is a party.
(b)
During the Agreement Term, the Executive shall report solely and directly to the
Chief Executive Officer of the Company or his designee.
(c)
During the Agreement Term, while employed by the Company, the Executive shall
devote his full time and best efforts to the business of the Company and shall
perform all duties and services for and on behalf of the Company as shall be
reasonably requested by the Chief Executive Officer of the Company or the Board
in their absolute discretion. The Executive’s duties may include providing
executive services for both the Company and the Subsidiaries, as determined by
the Chief Executive Officer of the Company or the Board.
(d) The
term of employment under this Agreement shall commence on the Effective Date
and, unless earlier terminated under Section 3 below, shall terminate as of the
close of business on the day before the second anniversary of the Effective Date
(the “Initial
Term”). Unless a Non-Renewal Notice (as defined below) is given as herein
provided or the Executive’s employment is earlier terminated in accordance with
the terms hereof, at the end of the Initial Term and each anniversary thereof,
the period of the Executive’s employment shall thereafter be automatically
extended for an additional twelve (12)-month period. The Company or the
Executive may elect to terminate the automatic extension of the Agreement Term
(as defined below) by giving written notice of such election not less than
thirty (30) days prior to the end of the then current Agreement Term (the “Non-Renewal Notice”).
The Initial Term and any renewal term are referred to herein as the “Agreement
Term”.
(e)
For purposes of this Agreement, the following terms shall have the meanings set
forth in this Section 1(e):
(i) “Change
in Control” shall mean:
(1) the
acquisition after the Effective Date by an individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934 (the “Exchange
Act”)) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than 50% of the total voting power
of the voting securities of the Company entitled to vote generally in the
election of directors (the “Voting Securities”); provided, however, that the
following acquisitions shall not constitute a Change in Control: (A) any
acquisition, directly or indirectly by or from the Company or any Subsidiary, by
any employee benefit plan (or related trust) sponsored or maintained by the
Company or any Subsidiary or by the Executive (whether directly or indirectly),
(B) any acquisition by any underwriter in connection with any firm commitment
underwriting of securities to be issued by the Company, (C) any acquisition by
any individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) who, as of the Effective Date, beneficially owns
20% or more of the Voting Securities or (D) any acquisition by any corporation
if, immediately following such acquisition, 50% or more of the then outstanding
shares of common stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation (entitled to vote
generally in the election of directors), are beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who,
immediately prior to such acquisition, were the beneficial owners of the Voting
Securities in substantially the same proportions, respectively, as their
ownership, immediately prior to such acquisition of the Voting
Securities;
(2) the
consummation after the Effective Date of (A) a complete liquidation or
substantial dissolution of the Company or (B) the sale or other disposition,
during any 12-month period ending on the date of the most recent sale or
disposition, of assets of the Company that have a total gross fair market value
equal to or more than 75% of the total gross fair market value of all of the
assets of the Company immediately before such sale or disposition, in each case
other than to a subsidiary, wholly-owned, directly or indirectly, by the Company
or to a holding company of which the Company is a direct or indirect wholly
owned subsidiary prior to such transaction; or
(3) the
occurrence of a merger, reorganization or consolidation, other than a merger,
reorganization or consolidation with respect to which all or substantially all
of the individuals and entities who were the beneficial owners, immediately
prior to such merger, reorganization or consolidation, of the common stock of
the Company (“Common
Stock”) and the Voting Securities beneficially own, directly or
indirectly, immediately after such reorganization, merger or consolidation 50%
or more of the then outstanding common stock and voting securities (entitled to
vote generally in the election of directors) of the corporation resulting from
such reorganization, merger or consolidation in substantially the same
proportions as their respective ownership, immediately prior to such
reorganization, merger or consolidation, of the Common Stock and the Voting
Securities.
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Notwithstanding
the foregoing, a “Change in Control” shall not include any event, circumstance
or transaction which results from the action of any entity or group which
includes, is affiliated with, or is wholly or partially controlled by, one or
more executive officers of the Company and in which the Executive participates
(whether directly or indirectly).
(ii) “Subsidiary” shall
mean any corporation, partnership, joint venture or other entity during any
period in which at least a 50% interest in such entity is owned, directly or
indirectly, by the Company (or a successor to the Company).
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2.
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Compensation and Other
Benefits.
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(a) Base Salary. During
the Agreement Term, the Executive shall receive an annual base salary (“Base Salary”),
payable in accordance with the Company’s normal payroll practices, of $275,000.
The Base Salary may be increased by the Company’s Compensation Committee, in its
discretion.
(b) Bonus.
(i) Annual
Bonus. In respect of
each fiscal year during the Agreement Term, the Executive shall be eligible to
earn an annual bonus as set forth on Exhibit A (the “Bonus”). Such Bonus
may be based on Company performance, legacy public sector business, new growth
in public sector business and such other criteria as determined by the Company
in its sole discretion. The Executive’s target Bonus for each fiscal year during
the Agreement Term shall equal 50% of the Executive’s Base Salary, and the
Executive’s maximum Bonus for each fiscal year during the Agreement Term shall
equal 100% of Base Salary. The Company shall use reasonable efforts to pay any
Bonus earned by the Executive within ninety (90) days of the end of the fiscal
year to which such Bonus relates, but in no event shall any earned Bonus be paid
later than March 15th following the close of the fiscal year to which the Bonus
relates. Notwithstanding anything contained herein to the contrary, the Bonus,
if any, for the fiscal year ending August 31, 2010 will be pro-rated based on
the number of days that the Executive was employed by the Company during such
fiscal year. With respect to the fiscal year ending August 31, 2010, the
Executive shall be guaranteed a minimum Bonus of $35,000.
(ii) Signing Bonus. Within
ten (10) business days after the Effective Date, the Company will pay the
Executive $25,000 (less applicable tax withholdings) as a signing bonus (the
“Signing Bonus”). In the event that the Executive resigns his employment other
than for Good Reason or is terminated by the Company for Cause, in either case,
within 1 year after the Effective Date, the Executive shall repay the entire
gross amount of the Signing Bonus to the Company within ten (10) business days
of such termination.
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(c) Equity. Within a
reasonable period of time following the Effective Date, the Company shall grant
to the Executive under the Company’s 2006 Stock-Based Incentive Compensation
Plan (the “Plan”) 137,500 shares
of restricted stock, which restricted stock shall vest in equal annual
installments on each of the first four anniversaries of the Effective Date,
provided that the Executive remains employed by the Company on such vesting date
(the “Restricted
Stock”). Notwithstanding the foregoing, the Restricted Stock shall, to
the extent then outstanding and unvested, become 100% vested in the event of the
Executive’s termination of employment during the Agreement Term due to his death
or Disability (as defined below). The Restricted Stock grant described in this
Section 2(c) shall be subject to the terms and conditions of the Plan and such
other terms and conditions as determined by the Company and set forth in the
award agreement evidencing such grant.
(d) Employee Benefits.
During the Agreement Term, the Executive shall be entitled to participate on the
same basis as the other executive employees of the Company, in any pension,
retirement, savings, medical, disability or other welfare benefit plans
maintained by the Company from time to time and in accordance with the terms
thereof.
(e) Expense
Reimbursement. During the Agreement Term, the Company shall reimburse the
Executive for all out-of-pocket travel, lodging, meal and other reasonable
expenses incurred by him in connection with his performance of services
hereunder, upon submission of appropriate evidence, in accordance with the
Company’s policy, of the incurrence and purpose of each such expense and
otherwise in accordance with the Company’s business travel and expense
reimbursement policy as in effect from time to time.
(f) Vacation. During the
Agreement Term, Executive shall be entitled to four weeks of paid vacation on an
annualized basis. Vacation shall be prorated for part of a year worked. Such
vacation shall be taken at such times as shall be approved by the Company, in
the reasonable exercise of its discretion.
3. Termination of
Employment. The Executive’s employment with the Company during the
Agreement Term may be terminated by the Company or the Executive without breach
of this Agreement only as provided in this Section 3.
(a) Termination Due to
Disability. The Executive’s employment hereunder may be terminated by the
Company in the event of the Executive’s “Disability,” which shall mean that the
Executive is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected
to result in death or can be expected to last for a continuous period of not
less than 12 months. The determination of the Executive’s Disability shall
(i) be made by an independent
physician selected by the Company and the Executive (provided that if the
Executive and the Company cannot agree as to such an independent physician, each
shall appoint one physician and those two physicians shall appoint a third
physician who shall make such determination), (ii) be final and binding on the
parties hereto and (iii) be made
taking into account such competent medical evidence as shall be presented to
such independent physician by the Executive and/or the Company or by any
physician or group of physicians or other competent medical experts employed by
the Executive and/or the Company to advise such independent
physician.
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(b) Termination Due to
Death. The Executive’s employment hereunder shall terminate upon
the Executive’s death.
(c) Termination by
the Company for Cause. The
Company may immediately terminate the Executive’s employment hereunder at any
time for Cause (as defined below). “Cause” shall mean
(i) the continued willful
failure of the Executive substantially to perform his duties hereunder or his
grossly negligent performance of such duties (other than any such failure due to
the Executive’s physical or mental illness), (ii) the Executive having engaged in
misconduct that has caused or is reasonably expected to result in material
injury to the Company or any of its Subsidiaries, (iii) a material violation by the
Executive of a Company policy, (iv) the breach by the Executive of any
of his material obligations hereunder or under any other written agreement or
covenant with the Company or any of its Subsidiaries, (v) a material failure by the Executive
to timely comply with a lawful direction or instruction given to him by the
Board, or the Company’s Chief Executive Officer or his designee, (vi) the Executive having been
convicted of, or entering a plea of guilty or nolo contendere to, a crime that
constitutes a felony or a misdemeanor involving moral turpitude (or comparable
crime in any jurisdiction that uses a different nomenclature), including any
offense involving dishonesty as such dishonesty relates to the Company’s assets
or business or the theft of Company property and (vii) the Executive’s insobriety or use
of illegal drugs, chemicals or controlled substances either (A) in the course of performing the
Executive’s duties and responsibilities under this Agreement, or (B) otherwise affecting the ability of
the Executive to perform the same. In the event of litigation concerning the
Company’s termination of Executive for Cause, the Company shall prove that it
terminated the Executive for Cause by a standard of clear and convincing
evidence. In the case of a termination for Cause as described in clauses (i),
(ii), (iii), (iv) and (v) of this Section, the Board or the Chief Executive
Officer, as applicable, shall give the Executive written notice of its or his
intention to terminate him for Cause, such notice to state in detail the
particular circumstances that constitute the grounds on which the proposed
termination for Cause is based. The Executive shall have fifteen (15) days,
after receiving such special notice, to cure such grounds, to the extent such
cure is possible (as reasonably determined by the Board in its sole discretion).
If he fails to cure such grounds to the Board’s reasonable satisfaction, the
Executive shall thereupon be terminated for Cause.
(d) Termination by Company
Without Cause. The Company may terminate the Executive’s employment
hereunder at any time Without Cause (as defined below) by giving the Executive
prior written Notice of Termination (as defined below), which notice shall be
effective immediately, or at such later time as specified in such notice. A
termination “Without
Cause” shall mean a termination of the Executive’s employment by the
Company other than as a result of his death or Disability or for Cause.
Notwithstanding the foregoing provisions of this Section 3(d), if the
Executive’s employment is terminated by the Company in accordance with this
Section 3(d) and, within a reasonable time period thereafter, not to exceed
sixty (60) days, it is determined by the Board that circumstances existed which
would have constituted a basis for termination of the Executive’s employment for
Cause in accordance with Section 3(c), the Executive’s employment will be deemed
to have been terminated for Cause in accordance with Paragraph
3(c).
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(e) Termination
by the
Executive for Good Reason. The Executive may terminate his employment
under this Agreement for Good Reason by providing the Company with a Notice of
Termination specifying the actions giving rise to Good Reason within 30 days
after the occurrence of such actions; provided, however, that the Company shall
have a period of 30 days following receipt of such Notice of Termination to cure
such actions. For the purpose of this Agreement, the term “Good Reason” shall
mean the occurrence of any of the following events without the consent of the
Executive: (i) any material reduction in the Executive’s Base Salary or in the
Executive’s eligibility for the Annual Bonus described in Section 2(b)(i),
above, not applicable to the Company’s executives generally; (ii) a material
diminution in the Executive’s authority, duties or responsibilities; or (iii)
the relocation by the Company of the Executive’s primary place of employment
with the Company to a location not within a 50 mile radius of Philadelphia,
PA;
(f) Voluntary Termination by the Executive
Without Good Reason. The Executive may voluntarily terminate his
employment hereunder without Good Reason at any time by giving the Company prior
written Notice of Termination at least 90 days prior to such termination;
provided that the Board may, in its sole discretion, terminate the Executive’s
employment hereunder prior to the expiration of the 90-day notice period;
further provided, that, for all purposes of this Agreement, such termination
shall be deemed a voluntary termination of employment by the Executive without
Good Reason. In such event and upon the expiration of such 90-day period (or
such shorter time as the Board in its sole discretion may determine), the
Executive’s employment hereunder shall immediately and automatically terminate.
In the event that the Board elects to terminate the Executive’s employment
before the end of the 90-day notice period in accordance with this Section 3(f),
the Executive shall receive his Base Salary until the earlier of the conclusion
of the 90-day notice period or the date on which the Executive has begun full
time employment with another company.
(g) Notice
of
Termination. Any termination of the Executive’s employment by Company or
the Executive, other than a termination due to the Executive’s death, shall be
communicated by a written Notice of Termination addressed to the appropriate
party. A “Notice
of Termination” shall
mean a notice (delivered in accordance with Section 10(k) below) that indicates
the Date of Termination as defined below), which shall not be earlier than the
date on which the notice is provided, which indicates the specific termination
provision in this Agreement relied on and which sets forth in reasonable detail
the facts and circumstances, if any, claimed to provide a basis for termination
of the Executive’s employment under the provision so indicated.
(h) For purposes
of this Agreement, the “Date of Termination”
is the last day that the Executive is employed by the Company, provided the
Executive’s employment is terminated in accordance with the foregoing provisions
of this Section 3.
(i) Resignation
upon Termination. As of the
Date of Termination, the Executive shall resign, in writing, from all positions
then held by him with the Company and its Subsidiaries.
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(j) Cessation of Professional
Activity. Upon delivery of a Notice of Termination by any party, the
Company may relieve the Executive of his responsibilities and require the
Executive to immediately cease all professional activity on behalf of the
Company. In addition, in the event that the Board determines that there is a
reasonable basis for it to investigate whether circumstances exist that would,
if true, permit the Company to terminate the Executive’s employment for Cause,
the Board may relieve the Executive of his responsibilities during the pendency
of such investigation.
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4.
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Payments Upon
Certain Terminations.
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(a) General. If, during
the Agreement Term, the Executive’s employment terminates for any reason, the
Executive (or his estate, beneficiary or legal representative) shall be entitled
to receive the following:
(i) any earned or
accrued but unpaid Base Salary through the Date of Termination (including,
except in the case of a termination for Cause, with respect to unused vacation
time); and
(ii) all amounts
payable and vested benefits accrued under any otherwise applicable plan, policy,
program or practice of the Company (other than relating to severance) in which
the Executive was a participant during his employment with Company in accordance
with the terms thereof; provided that the foregoing shall not be construed as
requiring the Executive to be treated as employed by the Company for purposes of
any employee benefit plan or arrangement following the date of the Executive’s
Date of Termination except as otherwise expressly provided in this Agreement or
required by law.
(b) Termination
Without Cause; Termination for Good Reason. If, during the
Agreement Term, the Company terminates the Executive’s employment Without Cause
or the Executive terminates his employment for Good Reason, the Executive shall
be entitled to receive, in addition to the payments and benefits described in
Section 4(a)(i) and Section 4(a)(ii) above, (A) any earned but unpaid Bonus with
respect to any fiscal year of the Company ending prior to the Date of
Termination and (B) provided Executive executes and delivers a general release
of all claims in form and substance satisfactory to the Company within
forty-five (45) days following his termination of employment, (1) his Base
Salary, at the rate in effect hereunder immediately prior to the Date of
Termination, which shall be payable in installments as provided in the last
sentence of this Section 4(b), until the later of (i) the day before the second
anniversary of the Effective Date or (ii) one year following the Date of
Termination and (2) a pro-rata Bonus payment for the fiscal year of the
Executive’s Date of Termination, equal to the Bonus that the Executive would
have been entitled to if he had remained employed by the Company at the end of
such fiscal year multiplied by a fraction, the numerator of which is the number
of days transpired in the fiscal year up to and including the Date of
Termination, and the denominator of which is 365, which pro-rata Bonus shall be
payable at the time provided in Section 2(b) (or, if such payment date would be
earlier than the forty-fifth (45th) date
following such termination, on the forty-fifth (45th) date
following such termination). For purposes of clause (B)(1) of this Section 4(b),
the Executive shall not be entitled to receive any continued Base Salary
payments during the forty-five (45) day period following his termination of
employment, and any continued Base Salary payments that would have otherwise
been paid to the Executive during such forty-five (45) day period shall be paid
to the Executive in a lump-sum on the Company’s first pay date following the
expiration of such forty-five (45) day period, with any remaining continued Base
Salary payments to be made in accordance with the Company’s normal payroll
practices, as may be in effect from time to time.
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(c) Termination Due
to Death or Disability. If,
during the Agreement Term, the Executive dies or the Company terminates the
Executive’s employment hereunder due to his Disability, the Executive (or his
estate, beneficiary or legal representative) shall be entitled to receive, in
addition to the payments and benefits described in Section 4(a)(i) and Section
4(a)(ii) above, (A) any earned but unpaid Bonus with respect to any fiscal year
of the Company ending prior to the Date of Termination and (B) a pro-rata Bonus
payment for the fiscal year of the Executive’s death or Disability, equal to the
Bonus that the Executive would have been entitled to if he had remained employed
by the Company at the end of such fiscal year multiplied by a fraction, the
numerator of which is the number of days transpired in the fiscal year up to and
including the Date of Termination, and the denominator of which is 365, which
pro-rata Bonus shall be payable at the time provided in Section 2(b). In
addition, if, during the Agreement Term, the Executive dies or the Company
terminates the Executive’s employment hereunder due to his Disability, the
Restricted Stock shall, to the extent then outstanding and unvested, become 100%
vested on the Date of Termination.
(d) No Other
Obligations. If the
Executive’s Date of Termination occurs during the Agreement Term under any
circumstances described in Section 3, the Company shall have no obligation to
make payments under the Agreement for periods after the Executive’s Date of
Termination other than those payments in accordance with Sections 4(a), 4(b) and
4(c) above.
(e) Payment. Except as
otherwise provided in this Agreement, any payments to which the Executive is
entitled under Sections 4(a), 4(b) and 4(c) shall be made as soon as
administratively feasible following the Date of Termination and in no event
later than 90 days following the Date of Termination.
(f) Certain
Terminations in Connection with a Change in
Control. Notwithstanding anything contained in this Agreement to
the contrary if, in connection with a Change in Control described in Section
1(e)(i)(2)(B) (an “Asset Sale”), the Executive is offered
employment with the acquirer of the Company’s assets (or any of its affiliates),
then the Executive shall not be entitled to any of the payments or benefits
described in Section 4(b) upon his termination of employment with the Company in
connection with such Asset Sale, unless the Executive terminates his employment
for Good Reason in accordance with Section 3(e), above.
5. Duties on
Termination. Subject to the terms and conditions of this Agreement, to
the extent that there is a period of time elapsing between the date of delivery
of a Notice of Termination, and the Date of Termination, the Executive shall
continue to perform his duties as set forth in this Agreement during such
period, and shall also perform such services for the Company as are necessary
and appropriate for a smooth transition to the Executive’s successor, if any.
Notwithstanding the foregoing provisions of this Section 5, the Company may
suspend the Executive from performing his duties under this Agreement following
the delivery of a Notice of Termination providing for the Executive’s
resignation, or delivery by the Company of a Notice of Termination providing for
the Executive’s termination of employment for any reason; provided, however,
that during the period of suspension (which shall end on the Date of
Termination), the Executive shall continue to be treated as employed by the
Company for other purposes, and his rights to compensation or benefits shall not
be reduced by reason of the suspension.
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6.
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Restrictive
Covenants.
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(a) Noncompetition.
(i) During the
Agreement Term and continuing until the later of (i) the day before the second
anniversary of the Effective Date or (ii) one year following the Date of
Termination (the “Restrictive
Period”):
(1) The Executive
shall not, without the express written consent of the Board, be employed by,
serve as a consultant to, or otherwise assist or directly or indirectly provide
services to a Competitor (as defined below) if: (A) such services are to be
provided with respect to any location in which the Company or a Subsidiary does
business, or with respect to any location in which the Company or a Subsidiary
has devoted material resources to doing business; or (B) the trade secrets,
confidential information, or proprietary information (including, without
limitation, confidential or proprietary methods) of the Company and the
Subsidiaries to which the Executive had access could reasonably be expected to
benefit the Competitor if the Competitor were to obtain access to such secrets
or information.
(2) The Executive
shall not, without the express written consent of the Board, directly or
indirectly own an equity interest in any Competitor (other than ownership of 1%
or less of the outstanding stock of any corporation listed on a national stock
exchange or included in the NASDAQ System).
(3) The Executive
shall not, without the express written consent of the Board, solicit or attempt
to solicit any person or entity who is then or, during the twelve-month period
prior to such solicitation or attempt by the Executive, was (or was solicited to
become) a customer or supplier of the Company or a Subsidiary, or a user of the
services provided by the Company or a Subsidiary.
(4) The Executive
shall not without the express written consent of the Board, solicit, entice,
persuade, induce or hire any individual who is employed by the Company or any
Subsidiary (or was so employed within 90 days prior to the Executive’s action)
to terminate or refrain from renewing or extending such employment or to become
employed by or enter into contractual relations with any other individual or
entity other than the Company or any Subsidiary, and the Executive shall not
approach any such employee for any such purpose or authorize or knowingly
cooperate with the taking of any such actions by any other individual or
entity.
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(ii) The term
“Competitor” means any enterprise (including a person, entity, firm or business,
whether or not incorporated) during any period in which it is engaged in or
aiding others to conduct business that engages in, or plans to engage in, any
line of business that the Company or its Subsidiaries engages in or has made
plans to engage in during the Agreement Term, or within the prior 12 months was
engaged in, or otherwise competes, directly or indirectly, with the Company or
any of its Subsidiaries.
(b) Non-Disparagement.
The Executive and the Company agree that each will not make any false,
defamatory or disparaging statements about the other, the Subsidiaries, or the
officers or directors of the Company or the Subsidiaries that are reasonably
likely to cause material damage to the Executive, the Company, the Subsidiaries,
or the officers or directors of the Company or the Subsidiaries.
(c) Confidential
Information.
(i) The Executive
agrees that, during the Agreement Term and at all times thereafter, he will (1)
keep secret all Confidential Information (as defined below) and Intellectual
Property (as defined below) which may be obtained during his employment by the
Company and (2) not reveal or disclose any Confidential Information or
Intellectual Property, directly or indirectly, except with the Company’s prior
written consent. The Executive shall not make use of the Confidential
Information or the Intellectual Property for the Executive’s own purposes or for
the benefit of anyone other than the Company and shall protect the Confidential
Information and the Intellectual Property against disclosure, misuse, espionage,
loss and theft.
(ii)
The Executive acknowledges and agrees that all Intellectual Property is and
shall be owned by the Company. The Executive hereby assigns and shall assign to
the Company all ownership rights possessed in any Intellectual Property
contributed, conceived or made by the Executive (whether alone or jointly with
others) while employed by the Company, whether or not during work hours. The
Executive shall promptly and fully disclose to the Company in writing all such
Intellectual Property after such contribution, conception or other development.
The Executive agrees to fully cooperate with the Company, at the Company’s
expense, in securing, enforcing and otherwise protecting throughout the world
the Company’s interests in such intellectual Property, including, without
limitation, by signing all documents reasonably requested by the
Company.
(iii)
Immediately following the Date of Termination, the Executive agrees to promptly
deliver to the Company all memoranda, notes, manuals, lab notebooks, computer
diskettes, passwords, encryption keys, electronic mail and other written or
electronic records (and all copies thereof) constituting or relating to
Confidential Information or intellectual Property that the Executive may then
possess or have control over. The Executive shall provide written certification
that all such materials have been returned.
(iv)
For purposes of this Agreement, the following terms shall be defined as set
forth below:
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(1) “Confidential
Information” shall mean all information, in any form or medium, that
relates to the business, suppliers and prospective suppliers, existing and
potential creditors and financial backers, marketing, costs, prices, products,
processes, services, methods, computer programs and systems, personnel,
customers, potential customers, research or development of the Company and the
Subsidiaries and all other information related to the Company and the
Subsidiaries which is not readily available to the public; provided, however,
that if and to the extent such Confidential Information becomes available to the
public through no fault of the Executive, this restriction shall not apply to
such information. Confidential Information shall include any of the foregoing
information that is created or developed by the Executive during his employment
by the Company.
(2) “Intellectual
Property” shall mean, with respect to the following which are created or
existing during the period of the Executive’s employment by the Company, any:
(A) idea, know-how, invention, discovery, design, development, software, device,
technique, method or process (whether or not patentable or reduced to practice
or including Confidential Information) and related patents and patent
applications and reissues, reexaminations, renewals, continuations-in-part,
continuations, and divisions thereof; (B) copyrightable and mask work (whether
or not including Confidential Information) and related registrations and
applications for registration; (C) trademarks, trade secrets and other
proprietary rights; and (D) improvements, updates and modifications of the
foregoing made from time to time. Intellectual Property shall include any of the
foregoing that is created or developed by the Executive during his employment by
the Company.
(d) Duty of Loyalty to the
Company. Nothing in this Section 6 shall be construed as limiting the
Executive’s duty of loyalty to the Company, or any other duty otherwise owed to
the Company, while the Executive is employed by the Company.
7. Assistance with
Claims. The Executive agrees that, during the Agreement Term, and
continuing for a reasonable period after the Executive’s Date of Termination,
the Executive will assist the Company and the Subsidiaries in defense of any
claims that may be made against the Company and the Subsidiaries, and will
assist the Company and the Subsidiaries in the prosecution of any claims that
may be made by the Company or the Subsidiaries, to the extent that such claims
may relate to services performed by the Executive for the Company and the
Subsidiaries. The Executive agrees to promptly inform the Company upon becoming
aware of any lawsuits involving such claims that may be filed against the
Company or any Subsidiary. The Company agrees to provide legal counsel to the
Executive in connection with such assistance (to the extent legally permitted),
and to reimburse the Executive for all of the Executive’s reasonable
out-of-pocket expenses associated with such assistance, including travel
expenses. For periods after the Executive’s employment with the Company
terminates, the Company agrees to provide reasonable compensation to the
Executive for such assistance. To the extent permitted by law, the Executive
also agrees to promptly inform the Company upon being asked to assist in any
investigation of the Company or the Subsidiaries (or their actions) that may
relate to services performed by the Executive for the Company or the
Subsidiaries, regardless of whether a lawsuit has then been filed against the
Company or the Subsidiaries with respect to such investigation. Nothing in this
Agreement shall be construed to limit the Executive’s right to indemnification
from the Company under applicable law, by-laws or articles of organization, or
to coverage under the Company’s Director and Officers insurance policy, as may
be in effect from time to time.
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8. Disclosure of
Agreement. The Executive shall provide each of his subsequent employers
during the two-year period following his termination of employment with the
Company with a copy of the restrictive covenants set forth in Section 6 of this
Agreement in order to allow such subsequent employers to avoid inadvertently
causing the violation of such covenants. The Executive shall advise the Company
of the identity of each of his subsequent employers during the two-year period
following his termination of employment with the Company.
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9.
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Injunctive Relief with
Respect to Covenants; Certain Acknowledgments;
Etc.
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(a) Injunctive Relief.
The Executive acknowledges and agrees that the covenants, obligations and
agreements of Executive contained in Section 6 relate to special, unique and
extraordinary matters and that a violation of any of the terms of such
covenants, obligations or agreements will cause the Company irreparable injury
for which adequate remedies are not available at law. Therefore, the Executive
agrees that the Company shall be entitled to an injunction, restraining order or
such other equitable relief (without the requirement to post bond unless
required by applicable law) as a court of competent jurisdiction may deem
necessary or appropriate to restrain the Executive from committing any violation
of such covenants, obligations or agreements. These injunctive remedies are
cumulative and in addition to any other rights and remedies the Company may
have. The Company shall be entitled to collect from the Executive any costs of
obtaining injunctive relief, including, without limitation, attorneys’
fees.
(b) Blue Pencil. In the
event any term of Section 6 hereof shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its duration or geographic scope,
or by reason of it being too extensive in any other respect, it will be
interpreted to extend only over the maximum period of time for which it may be
enforceable, over the maximum geographical area as to which it may be
enforceable, or to the maximum extent in all other respects as to which it may
be enforceable, all as determined by such court in such action.
(c) Certain
Acknowledgements. The Executive acknowledges and agrees that the
Executive will have a prominent role in the management of the business, and the
development of the goodwill, of the Company and its Subsidiaries and will
establish and develop relations and contacts with the principal customers and
suppliers of the Company and its Subsidiaries in the United States of America
and the rest of the world, all of which constitute valuable goodwill of, and
could be used by the Executive to compete unfairly with, the Company and its
Subsidiaries and that (i) in the
course of his employment with the Company, the Executive will obtain
confidential and proprietary information and trade secrets concerning the
business and operations of the Company and its Subsidiaries in the United States
of America and the rest of the world that could be used to compete unfairly with
the Company and its Subsidiaries; (ii) the covenants and restrictions
contained in Section 6 are intended to protect the legitimate interests of the
Company and its Subsidiaries in their respective goodwill, trade secrets and
other confidential and proprietary information; (iii) the Executive desires and agrees
to be bound by such covenants and
restrictions; and (iv) the
compensation to be provided to the Executive is adequate consideration for the
restrictive covenants provided in Section 6.
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10. Miscellaneous.
(a) Binding Effect;
Assignment. This Agreement shall be binding on and inure to the benefit
of the Company, and its respective successors and permitted assigns. This
Agreement shall also be binding on and inure to the benefit of the Executive and
his heirs, executors, administrators and legal representatives. No party may
assign either this Agreement or any of its rights, interests or obligations
hereunder without the prior written approval of the other party; provided, that
the Company may assign its rights, interests and obligations hereunder to: (a) a
Subsidiary, subdivision or affiliate, provided that the Company shall remain
responsible to the Executive for such obligations in the event they are not met
by such assignee; or (b) a person, corporation, partnership, limited liability
company, organization or other entity that acquires or otherwise succeeds to
(whether by sale, stock purchase, merger or otherwise) all or substantially all
of the business or assets of the Company.
(b) Entire Agreement.
This Agreement constitutes the entire agreement among the parties hereto
concerning the subject matter hereof and supersedes all prior and
contemporaneous correspondence and proposals (including but not limited to
summaries of proposed terms and term sheets) and all prior and contemporaneous
promises, representations, understandings, arrangements and agreements, if any,
concerning such subject matter (including but not limited to those made to or
with the Executive by any other person); provided, however, that nothing in this
Agreement shall be construed to limit any policy or agreement that is otherwise
applicable relating to confidentiality, rights to inventions, copyrightable
material, business and/or technical information, trade secrets, solicitation of
employees, interference with relationships with other businesses, competition,
and other similar policies or agreement for the protection of the business and
operations of the Company and the Subsidiaries.
(c) Applicable Law. This Agreement
shall be governed in all respects, including as to validity, interpretation and
effect, by the laws of the State of Delaware without giving effect to the
conflict of laws rules of any state.
(d)
Consent to
Jurisdiction; Waiver of Jury Trial; Attorneys Fees.
(i) Consent to
Jurisdiction. Each party hereby irrevocably submits to the jurisdiction
of the courts of the State of Delaware and the federal courts of the United
States of America located in the State of Delaware solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of the
documents referred to in this Agreement, and in respect of the transactions
contemplated hereby and thereby. Each party hereby waives and agrees not to
assert, as a defense in any action, suit or proceeding for the interpretation
and enforcement hereof, or any such document or in respect of any such
transaction, that such action, suit or proceeding may not be brought or is not
maintainable in such courts or that the venue thereof may not be appropriate or
that this Agreement or any such document may not be enforced in or by such
courts. Each party hereby consents to and grants any such court jurisdiction
over the person of such parties and over the subject matter of any such dispute
and agree that the mailing of process or other papers in connection with any
such action or proceeding in the manner provided in Section 10(k) or in such
other manner as may be permitted by law, shall be valid and sufficient service
thereof.
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(ii) Waiver of Jury Trial.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER
THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH,
TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT. Each party certifies and acknowledges that (i) no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such
other party would not, in the event of litigation, seek to enforce the foregoing
waiver, (ii) each such party
understands and has considered the implications of this waiver, (iii) each such party makes this waiver
voluntarily, and (iv) each such
party has been induced to enter into this Agreement by, among other things, the
mutual waivers and certifications in this Section 10(d)(ii).
(e) Taxes. The Company
may withhold from any payments made under this Agreement all applicable taxes,
including but not limited to income, employment and social insurance taxes, as
shall be required by law.
(f) Key Man Insurance.
The Executive acknowledges that the Company may purchase “key man” insurance on
his life and hereby agrees to cooperate with the Company in obtaining such
insurance, including without limitation, submitting to such medical examinations
as may be required promptly upon request by the Company.
(g) Amendments. This
Agreement may be amended or cancelled only by mutual agreement of the parties in
writing. So long as the Executive lives, no person, other than the parties
hereto (and the Company’s successors and assigns), shall have any rights under
or interest in this Agreement or the subject matter hereof.
(h) Severability. The
invalidity or unenforceability of any provision of this Agreement will not
affect the validity or enforceability of any other provision of this Agreement,
and this Agreement will be construed as if such invalid or unenforceable
provision were omitted (but only to the extent that such provision cannot be
appropriately reformed or modified).
(i) Waiver of Breach. No
waiver by any party hereto of a breach of any provision of this Agreement by any
other party, or of compliance with any condition or provision of this Agreement
to be performed by such other party, will operate or be construed as a waiver of
any subsequent breach by such other party of any similar or dissimilar
provisions and conditions at the same or any prior or subsequent time. The
failure of any party hereto to take any action by reason of such breach will not
deprive such party of the right to take action at any time while such breach
continues.
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(j) Survival of
Agreement. Except as otherwise expressly provided in this Agreement, the
rights and obligations of the parties to this Agreement shall not survive the
termination of the Executive’s employment with the Company.
(k) Notices. Notices and all other
communications provided for in this Agreement shall be in writing and shall be
delivered personally or sent by registered or certified mail, return receipt
requested, postage prepaid, or sent by facsimile or prepaid overnight courier to
the parties at the addresses set forth below (or such other addresses as shall
be specified by the parties by like notice). Such notices, demands, claims and
other communications shall be deemed given:
(i)
in the case of delivery by overnight service with guaranteed next day delivery,
the next day or the day designated for delivery;
(ii)
in the case of certified or registered U.S. mail, five days after deposit in the
U.S. mail; or
(iii) in
the case of facsimile, the date upon which the transmitting party received
confirmation of receipt by facsimile, telephone or otherwise;
provided,
however, that in no event shall any such communications be deemed to be given
later than the date they are actually received. Communications that are to be
delivered by the U.S. mail or by overnight service or two-day delivery service
are to be delivered to the addresses set forth below:
to the
Company:
Emtec,
Inc.
00
Xxxxxxx Xxxx
Xxxxxxxxxxx,
XX 00000
Facsimile
number: 973-376-8846
or to the
Executive:
at the
address in the Company’s records.
All
notices to the Company shall be directed to the attention of Secretary of the
Company, with a copy to the Board. Each party, by written notice furnished to
the other party, may modify the applicable delivery address, except that notice
of change of address shall be effective only upon receipt.
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|
(1)
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Code Section 409A
Compliance.
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(i) The intent of
the parties is that payments and benefit under this Agreement comply with or be
exempt from Internal Revenue Code Section 409A and the regulations and guidance
promulgated thereunder (collectively, “Section 409A”) and, accordingly, to the
maximum extent permitted, this Agreement shall be interpreted to be in
compliance therewith. If the Executive provides the Company with documentation
from Executive’s tax counsel of a national reputation with expertise in Section
409A that any provision of this Agreement (or any award of compensation,
including equity compensation or benefits) would cause Executive to incur any
additional tax or interest under Section 409A (with specificity as to the reason
therefore) or the Company independently makes such determination, the Company
and the Executive agree to work in good faith to reform such provision (to the
extent permitted under Section 409A) to the minimum extent reasonably necessary
to conform with Section 409A. To the extent that any provision hereof is
modified in order to comply with or be exempt from Section 409A, such
modification shall be made in good faith and shall, to the maximum extent
reasonably possible, maintain the original intent and economic benefit to
Executive and the Company of the applicable provision without violating the
provisions of Section 409A. Notwithstanding anything contained herein to the
contrary, the Company shall not (i) be obligated to modify or amend this
Agreement in any manner to the extent that such modification or amendment would
(a) increase the Company’s obligations hereunder, (b) increase any amounts owed
by the Company hereunder or (c) otherwise accelerate the timing of payments owed
by the Company hereunder or (ii) be responsible for the failure of this
Agreement to comply with, or be exempt from, Section 409A, or for any taxes,
penalties or interest incurred by Executive under Section 409A.
(ii) Notwithstanding any
other provision of this Agreement to the contrary, if the Executive is a
“specified employee” within the meaning of Section 409A, and a payment or
benefit provided for in this Agreement would be subject to additional tax under
Section 409A if such payment or benefit is paid within six months after the
Executive’s “separation from service” (within the meaning of-Section 409A), then
such payment or benefit required under this Agreement shall not be paid (or
commence) during the six-month period immediately following the Executive’s
separation from service except as provided in the immediately following
sentence. In such an event, any payments or benefits that would otherwise have
been made or provided during such six-month period and which would have incurred
such additional tax under Section 409A shall instead be paid to the Executive in
a lump-sum cash payment, without interest, on the earlier of (i) the first
business day of the seventh month following the Executive’s separation from
service or (ii) the 10th
business day following the Executive’s death. If the Executive’s termination of
employment hereunder does not constitute a “separation from service” within the
meaning of Section 409A, then any amounts payable hereunder on account of a
termination of the Executive’s employment and which are subject to Section 409A
shall not be paid until the Executive has experienced a “separation from
service” within the meaning of Section 409A.
(iii) All expenses
or other reimbursements as provided herein shall be payable in accordance with
the Company’s policies in effect from time to time, but in any event shall be
made on or prior to the last day of the taxable year following the taxable year
in which such expenses were incurred by Executive.
In addition, no such reimbursement or expenses eligible for reimbursement
in any taxable year shall in any way affect the expenses eligible for
reimbursement in any other taxable year and the Executive’s right to reimbursement
or in-kind benefits shall not be subject to liquidation or exchanged for another
benefit.
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(m) Headings. The section
and other headings contained in this Agreement are for the convenience of the
parties only and are not intended to be a part hereof or to affect the meaning
or interpretation hereof.
* * * * *
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IN
WITNESS WHEREOF, the Company has duly executed this Agreement by its authorized
representative, and the Executive has hereunto set his hand, in each case
effective as of the date first above written.
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EMTEC,
INC.
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||
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By:
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/s/ XXXXXXX X. XXXXXXXX
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|
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Name:
XXXXXXX X. XXXXXXXX
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||
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Title:
CHIEF FINANCIAL OFFICER
|
||
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Date:
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||
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EXECUTIVE
|
||
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/s/ Xxxxx X. Xxxxxx
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Xxxxx
X. Xxxxxx
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Date:
2/21/2010
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