Employment Agreement
EMPLOYMENT AGREEMENT (this "Agreement"), dated June 19, 2006,
between XXXXXX EQUIPMENT, INC., it successors or assigns, a Delaware
corporation, (the "Company"), and Xxxxxxx Xxxxx (the "Employee").
1. Employment Period.
The Company shall employ the Employee, and the Employee shall serve the
Company, on the terms and conditions set forth in this Agreement, for the period
commencing on July 1, 2006 and ending on June 30, 2009, unless earlier
terminated (the "Initial Term"); provided that the term of employment hereunder
shall be renewed by the Board of Directors on June 30, 2009, and at each
three-year anniversary thereafter, for successive three-year terms (each such
term a "Renewal Term") unless the Company or the Employee provides written
notice to the other party, at least 60 days prior to the expiration of the
Initial Term or any Renewal Term, of the non-renewal of this Agreement. The
Initial Term and any subsequent Renewal Terms shall be referred to herein as the
"Employment Period."
2. Position & Duties.
(a) The Employee shall serve as Chief Operating Officer for the
Company, reporting to the Chief Executive Officer with such duties and
responsibilities as are customarily assigned to such position, and such other
duties and responsibilities not inconsistent therewith as may be assigned to him
from time to time.
(b) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Employee is entitled, the Employee shall
devote his full-time efforts to the business and affairs of the Company and use
his best efforts to carry out such responsibilities faithfully and efficiently.
3. Compensation.
(a) Base Salary. During the first contract year of the Initial Term,
the Employee shall receive an annual base salary (the "Annual Base Salary") of
$200,000. Employee will receive an annual salary review by the Board, or an
authorized committee thereof, on each anniversary of the Effective Date, which
may result in an annual increase in Employee's Annual Base Salary during the
Initial Term and any Renewal Term at the discretion of the Board. The Annual
Base Salary shall be payable in accordance with the Company's payroll practices
as in effect from time to time. The Board or an authorized committee thereof may
increase the Annual Base Salary above the foregoing amounts at its discretion.
(b) Sign-on Bonus. Employee shall be entitled to a sign-on bonus of
$25,000 upon execution of this agreement, payable on July 1, 2006.
(c) Special Incentive Award. A non-icentive option issued pursuant
to the Company's 2005 Stock Option Plan to purchase 100,000 shares with an
exercise price of $1.00 with a five year expiration date. The issue date will be
the same date as the auditors report date for the financial statements ending
June 30, 2006.
(d) Annual Bonuses. In addition to the Annual Base Salary, Employee
shall be entitled to annual discretionary bonuses ("Bonus") (as determined by
the Board or an authorized committee thereof) based upon Employee's Annual Base
Salary , up to 100% of Annual Base Salary, and consistent with operating and/or
other financial targets established by the Board or an authorized committee
thereof, for each respective fiscal year of Company during the Employment
Period. At the end of each fiscal year of Company during the Employment Period
Employee shall be entitled to receive annual discretionary bonus consisting of
one-half cash and one-half option grants (as determined by the Board or an
authorized committee thereof) pursuant to the Company's Stock Option Plan based
upon Employee's performance, and consistent with operating and/or other
financial targets established by the Board or an authorized committee thereof.
Such "Stock Option Compensation" shall be issued to Employee on the last day of
each fiscal year during the Employment Period, unless the Employee is terminated
by the Company for Cause (as hereinafter defined) or the Employee terminates his
employment without Good Reason (as hereinafter defined), in which case Employee
shall be entitled to only that portion of Stock Option Compensation which has
accrued hereunder as of the Date of Termination.
Confidential Xxxxxx Equipment, Inc. Page 1 of 9
(e) Insurance. During the Employment Period the Company will provide
Employee with term life insurance in the amount of 3x annual salary payable to
the beneficiaries of Employee's choice. Employee will cooperate with the Company
in obtaining such policies. In addition, the Employee shall be entitled, at his
discretion, to increase coverage and pay that additional amount out of pocket,
and assume the ownership of and pay the premiums on any policy on the Employee's
life currently being funded by the Company.
(f) Other Benefits. During the Employment Period, the Employee and
the Employee's immediate family shall be entitled to participate in all benefit
programs of the Company, including, but not limited to, 100% health, 100% dental
and 100% vision insurance coverage or reimbursement of the Employee's cost to
maintain, as well as all welfare benefit plans, practices, policies and programs
provided by the Company, including, but not limited to any, retirement plans and
profit sharing programs the Company may provide to any other employees from time
to time.
(g) Expenses. During the Employment Period, the Employee shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Employee in carrying out the Employee's duties under this Agreement,
provided that the Employee complies with the policies, practices and procedures
of the Company for submission of expense reports, receipts and similar
documentation of such expenses.
(h) Vacation. During the Employment Period, the Employee shall be
entitled to four (4) weeks paid vacation plus 10 U.S. national holidays per
annum.
(i) Vehicle. During the Employment Period, the Employee shall own or
lease a vehicle for which the Employee will receive reimbursement from the
Company of all `out of pocket' expenses, including loan or lease payments, and
insurance incurred by the Employee in connection with the purchase or lease and
operation of the vehicle and to keep the vehicle in a clean, roadworthy and
legal condition including all taxes and insurances.
4. Termination of Employment.
The Employee's employment may be terminated by the death or
disability of the Employee; by either party providing proper notice of
non-renewal of the Agreement; by the Company with or without Cause; or by the
Employee with or without Good Reason.
(a) Death or Disability. The Employee's employment shall terminate
automatically upon the Employee's death during the Employment Period. The
Company shall be entitled to terminate the Employee's employment because of the
Employee's Disability during the Employment Period. "Disability" means that (i)
the Employee has been unable, for a period of six months in any twelve (12)
month period, to perform the Employee's duties under this Agreement, as a result
of physical or mental illness or injury, and (ii) a physician selected by the
Company or its insurers, and acceptable to the Employee or the Employee's
guardian or legal representative, has determined that the Employee's incapacity
is total and permanent. A termination of the Employee's employment by the
Company for Disability shall be communicated to the Employee by written notice,
and shall be effective on the 30th day after receipt of such notice by the
Employee (the "Disability Effective Date"), unless the Employee is able to, and
does, return to full-time performance of the Employee's duties before the
Disability Effective Date.
Confidential Xxxxxx Equipment, Inc. Page 2 of 9
(b) By the Company.
(1) The Company may terminate the Employee's employment during
the Employment Period for Cause or without Cause. "Cause" means the
Employee's theft, embezzlement, misappropriation of or intentional
and malicious infliction of damage to the Company's property or
business opportunity.
(2) A termination of employment by the Company for Cause shall
be effectuated by giving the Employee written notice ("Notice of
Termination for Cause") of the termination, setting forth the
conduct of the Employee that constitutes Cause. Termination of
employment by the Company for Cause shall be effective on the date
when the Notice of Termination for Cause is given, unless the notice
sets forth a later date (which date shall in no event be later than
60 days after the notice is given). Employee will be immediately
advised of any allegations of fraud, embezzlement, or other
dishonesty mentioned in clause (1) above and will be provided a
period of 30 days from the date of notice to defend himself against
such allegations and to take any appropriate remedial action. If
Employee shows that the allegations are untrue or takes appropriate
remedial action to address the allegations, the Company will not
terminate the Employee's employment for Cause.
(3) A termination of the Employee's employment by the Company
without Cause shall be effected by giving the Employee written
notice of the termination at least sixty (60) days prior to the
termination date.
(c) By the Employee.
(1) The Employee may terminate employment in the event of a
Good Reason. "Good Reason" means:
(a) the assignment to the Employee of any duties
inconsistent in any respect with paragraph (a) of
Section 2 of this Agreement, other than actions that are
not taken in bad faith and are remedied by the Company
within thirty (30) days after receipt of notice thereof
from the Employee;
(b) any failure by the Company to comply with any
provision of Section 3 of this Agreement, other than
failures that are not taken in bad faith and are
remedied by the Company within thirty (30) days after
receipt of notice thereof from the Employee;
(c) the assignment of the Employee to an office more
than 50 miles away from the Company's current executive
offices; or
(d) the occurrence of a Non-Negotiated Change in Control
of the Company (as defined below).
For purposes of this Agreement, "Non-Negotiated Change in Control"
means any one or more of the following occurrences:
Confidential Xxxxxx Equipment, Inc. Page 3 of 9
Any individual, corporation (other than the Company, any trustees or
other beneficiary holding securities under any employee benefit plan
of the Company, or any Company owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company), partnership, trust,
association, pool, syndicate, or any other entity or any group of
persons acting in concert becomes the beneficial owner (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934) of
securities of the Company possessing more than fifty percent (50%)
of the voting power for the election of directors of the Company;
There shall be consummated any consolidation, merger, or other
business combination involving the Company or the securities of the
Company in which holders of voting securities of the Company
immediately prior to such consummation own, as a group, immediately
after such consummation, voting securities of the Company (or, if
the Company does not survive such transaction, voting securities of
the entity surviving such transaction) having less than fifty
percent (50%) of the total voting power in an election of directors
of the Company (or such other surviving corporation); or
There shall be consummated any sale, lease, exchange, or other
transfer (in one transaction or a series of related transactions) of
all, or substantially all, of the assets of the Company (on a
consolidated basis) to a party which is not controlled by or under
common control with the Company.
(d) A termination of employment by the Employee for Good Reason
shall be effectuated by giving the Company written notice ("Notice of
Termination for Good Reason") of the termination, setting forth the conduct of
the Company that constitutes Good Reason. A termination of employment by the
Employee for Good Reason shall be effective on the fifth business day following
the date when the Notice of Termination for Good Reason is given, unless the
notice sets forth a later date (which date shall in no event be later than 30
days after the notice is given).
(e) A termination of the Employee's employment by the Employee
without Good Reason shall be effected by giving the Company written notice of
the termination at least thirty (30) days prior to the termination date.
(f) Notwithstanding anything in this Agreement to the contrary, in
no event will any amount which otherwise would be payable under or pursuant to
this Agreement be payable to Employee to the extent such amount, together with
all other amounts payable and benefits provided to Employee under or pursuant to
this Agreement and/or under any other plan(s), agreements and/or arrangement(s)
arising out of Employee's employment relationship with Company and/or any direct
or indirect subsidiary of Company (including without limitation any such amounts
payable by any affiliate of Company or any acquirer of any of the stock or
assets of Company or any affiliate of such acquirer), if paid to Employee, would
result in Employee receiving an "excess parachute payment" for purposes of
Section 280G of the Internal Revenue Code of 1986, as amended. The determination
of whether a payment under or pursuant to this Agreement would result in
Employee receiving an excess parachute payment (but for the provisions of this
Section 4) shall be made by counsel for Company reasonably selected by Company,
after consultation with Company's independent auditor
(g) No Waiver. The failure to set forth any fact or circumstance in
a Notice of Termination for Cause or a Notice of Termination for Good Reason
shall not constitute a waiver of the right to assert, and shall not preclude the
party giving notice from asserting, such fact or circumstance in an attempt to
enforce any right under or provision of this Agreement.
(h) Date of Termination. The "Date of Termination" means the date of
the Employee's death, the Disability Effective Date, the date on which the
termination of the Employee's employment by the Company for Cause or by the
Employee for Good Reason is effective, or the date on which the Company gives
the Employee notice of a termination of employment without Cause or the Employee
gives the Company notice of a termination of employment without Good Reason, as
the case may be.
Confidential Xxxxxx Equipment, Inc. Page 4 of 9
5. Compensation and Benefits Upon Termination.
(a) Termination Without Cause, For Good Reason, or Due to
Non-renewal of the Agreement. If, during the Employment Period, the Company
terminates the Employee's employment without Cause, the Employee terminates the
Agreement for Good Reason, the Company shall pay the Employee's accrued but
unpaid portion of the Annual Base Salary (the "Accrued Obligations"). In
addition, the Employee shall be entitled to:
(i) receive an amount equal to the Employee's Annual Base
Salary as of the Date of Termination for a period of eithteen
(12) months after the Date of Termination, payable in
accordance with the Company's normal payroll practices;
(ii) continue to participate in all employee welfare benefit
plans (as defined by the Employee Retirement Income Security
Act of 1974, as amended) in which Employee participated on his
effective termination date, to the extent permitted by the
applicable plans and subject to their terms, conditions, and
eligibility requirements. The Company will pay or, at the
Company's discretion, reimburse Employee for the premiums
actually paid, to continue converage under such plans during
the period; and
The payments provided pursuant to this paragraph (a) of
Section 5 are intended as liquidated damages for a termination
of the Employee's employment by the Company other than for
Cause or Disability, for the actions of the Company leading to
a termination of the Employee's employment by the Employee for
Good Reason, and for non-renewal of the Agreement by either
party, and shall be the sole and exclusive remedy therefore.
(b) Termination as a Result of Employee's Death or Disability. If
the Employee's employment is terminated by reason of the Employee's death or
Disability during the Employment Period, (i) the Company shall pay the Accrued
Obligations to the Employee or the Employee's estate or legal representative, as
applicable, in a lump sum in cash within 30 days after the Date of Termination.
In addition, if the Employee's employment is terminated by reason of Disability,
the Company will continue to pay to Employee until the earlier of: (i)
expiration of the Employment Period, or (ii) the date of Employee's death, the
Annual Base Salary, less any amounts received by Employee under any disability
insurance coverage maintained for Employee by the Company.
(c) Termination for Cause or Other than for Good Reason. If the
Employee's employment is terminated by the Company for Cause during the
Employment Period, or if the Employee terminates his employment during the
Employment Period other than for Good Reason, the Company shall pay Employee the
Accrued Obligations.
6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Employee's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
for which the Employee may qualify, nor, subject to paragraph (f) of Section 4,
shall anything in this Agreement limit or otherwise affect such rights as the
Employee may have under any contract or agreement with the Company or any of its
affiliated companies. Vested benefits and other amounts that the Employee is
otherwise entitled to receive under any plan, policy, practice or program of, or
any contract or agreement with, the Company or any of its affiliated companies
on or after the Date of Termination shall be payable in accordance with such
plan, policy, practice, program, contract or agreement, as the case may be,
except as explicitly modified by this Agreement.
Confidential Xxxxxx Equipment, Inc. Page 5 of 9
7. Exclusivity of Services and Restrictions. During the Employment Period
and for a further period of 1 years following termination of Employee's
employment (other than termination for Cause or without Good Reason), Employee
shall not, directly or indirectly, (a) be or become interested in or associated
with (as an officer, director, stockholder, partner, consultant, owner,
employee, agent, creditor or otherwise) any business that is then, or which then
proposes to become, a direct competitor of the Company anywhere in the world;
provided, that the foregoing shall not restrict Employee from the ownership,
solely as an investment, of securities of any business if such ownership is (i)
not as controlling person of such business, (ii) not as a member of a group that
controls such business, and (iii) not as a direct or indirect beneficial owner
of 5% or more of any class of securities of such business.
The restrictions of this Section 7 shall also apply to Employee for
a termination for Cause or without Good Reason, if within ten (10) days
following the Date of Termination, the Company provides written notice that it
will continue to pay Employee his Base Annual Salary and continue his benefits
as described in Section 5 (a) for a period of twelve (12) months following the
Date of Termination.
8. Confidentiality; Return of Property; Non-Solicitation of Employees:
(a) The Employee acknowledges that during the Employment Period he
will receive confidential information from the Company and affiliates of the
Company (each a "Relevant Entity"). Accordingly, the Employee agrees that during
the Employment Period and thereafter for a period of two years, the Employee and
his affiliates shall not, except in the performance of his obligations to the
Company hereunder or as may otherwise be approved in advance by the Company,
directly or indirectly, disclose or use (except for the direct benefit of the
Company) any confidential information that he may learn or has learned by reason
of his association with any Relevant Entity. Upon termination of this Agreement,
the Employee shall promptly return to the Company any and all properties,
records or papers of any Relevant Entity, that may have been in his possession
at the time of termination, whether prepared by the Employee or others,
including, but not limited to, confidential information and keys. For purposes
of this Agreement, "confidential information" includes all data, analyses,
reports, interpretations, forecasts, documents and information concerning a
Relevant Entity and its affairs, including, without limitation with respect to
clients, products, policies, procedures, methodologies, trade secrets and other
intellectual property, systems, personnel, confidential reports, technical
information, financial information, business transactions, business plans,
prospects or opportunities, (i) that the Company reasonably believes are
confidential or (ii) the disclosure of which could be injurious to a Relevant
Entity or beneficial to competitors of a Relevant Entity, but shall exclude any
information that (x) the Employee is required to disclose under any applicable
laws, regulations or directives of any government agency, tribunal or authority
having jurisdiction in the matter or under subpoena or other process of law, (y)
is or becomes publicly available prior to the Employee's disclosure or use of
the information in a manner violative of the second sentence of this Section
8(a), or (z) is rightfully received by Employee without restriction or
disclosure from a third party legally entitled to possess and to disclose such
information without restriction (other than information that he may learn or has
learned by reason of his association with any Relevant Entity). For purposes of
this Agreement, "affiliate" means any entity that, directly or indirectly, is
controlled by, or under common control with, the Employee. For purposes of this
definition, the terms "controlled" and "under common control with" means the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of such person, whether through the ownership of
voting stock, by contract or otherwise.
(b) Employee shall not, at any time during the twelve (12) month
period following the Employment Period, directly or indirectly solicit or
otherwise encourage any third party or representative thereof, who was at the
end of the Employment Period, a customer of the Company, for the purpose of
causing such customer or customers to purchase, lease or otherwise use any
competitive product or service offered by Employee or any organization with
which Employee is affiliated.
Confidential Xxxxxx Equipment, Inc. Page 6 of 9
(c) For a period of one (1) year following the termination of
Employee's employment with the Company for any reason, Employee shall not,
without the Company's express written consent, either on his own behalf or on
behalf of another, solicit employees of the Company or any subsidiary of the
Company for the purpose of hiring them or inducing them to leave the Company.
(d) Injunction. Notwithstanding any other provisions of this
Agreement, Employee acknowledges and agrees that in the event of a violation or
threatened violation of any of the provisions of this Section 8, the Company
shall have no adequate remedy at law and shall therefore be entitled to enforce
each such provision by temporary or permanent injunctive or mandatory relief
obtained in any court of competent jurisdiction without the necessity of proving
damage or posting any bond or other security, and without prejudice to any other
remedies that may be available at law or in equity.
9. No Mitigation. In no event shall the Employee be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Employee under any of the provisions of this Agreement and such
amounts shall not be reduced, regardless of whether the Employee obtains other
employment.
10. Successors.
(a) This Agreement is personal to the Employee and, without the
prior written consent of the Company, shall not be assignable by the Employee
otherwise than by will or the laws of descent and distribution. This Agreement
shall inure to the benefit of and be enforceable by the Employee's legal
representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
11. Governing Law and Arbitration.
(a) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be amended or
modified except by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(b) Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration in accordance with
the rules of the American Arbitration Association. Judgment may be entered on
the arbitrator's award in any court having jurisdiction; provided, however, that
either party shall be entitled to seek specific performance or injunctive relief
to enforce provisions of this Agreement.
(c) In any action brought to enforce the provisions of this
Agreement, the arbitrator is authorized to award the prevailing party its costs
and attorneys fees.
Confidential Xxxxxx Equipment, Inc. Page 7 of 9
12. Miscellaneous.
(a) All notices and other communications under this Agreement shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Employee: Xxxxxxx Xxxxx
0000 Xx Xxxxxx Xx.
Xxxxxxxxxxx, XX 00000
If to the Company: Xxxxxx Equipment, Inc.
0000 Xxxxx Xxxxxxx Xxx,
Xxxxxxxxx, XX 00000
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 10. Notices and communications
shall be effective when actually received by the addressee.
(b) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement. If any provision of this Agreement shall be held invalid or
unenforceable in part, the remaining portion of such provision, together with
all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with law.
(c) Notwithstanding any other provision of this Agreement, the
Company may withhold from amounts payable under this Agreement all federal,
state, local and foreign taxes that are required to be withheld by applicable
laws or regulations.
(d) The failure of the Employee or the Company to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
shall not be deemed to be a waiver of such provision.
(e) The Employee and the Company acknowledge that this Agreement
supersedes any other agreement between them concerning the subject matter
hereof.
(f) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, and which together shall constitute one
instrument.
Confidential Xxxxxx Equipment, Inc. Page 8 of 9
IN WITNESS WHEREOF, the Employee has hereunto set the Employee's hand and,
pursuant to the authorization of the Company's board of directors, the Company
has caused this Agreement to be executed in its name on its behalf, all as of
the day and year first above written.
/s/ XXXXXXX XXXXX
-----------------------------
Xxxxxxx Xxxxx
Xxxxxx Equipment, Inc.
0000 Xxxxx Xxxxxxx Xxx.
Xxxxxxxxx, XX 00000
/s/ XX XXXXX
-----------------------------
By: XX Xxxxx
Title: Interim CEO & Director
/s/ XXXXX XXXXX
-----------------------------
By: Xxxxx Xxxxx
Title: Director
/s/ XXXXXXX XXXXXXX
-----------------------------
By: Xxxxxxx Xxxxxxx
Title: Director
/s/ XXXXXXX X. XXXXX
-----------------------------
By: Xxxxxxx X. Xxxxx
Title: Director
Confidential Xxxxxx Equipment, Inc. Page 9 of 9
