EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") by and between COMPU-XXXX, INC., a
Delaware corporation ("Compu-XXXX") and e. TV Commerce Inc., a Delaware
Corporation ("x.XX, and together with Compu-XXXX, the "Company") with offices at
00 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000, and R.E. Xxxxxx IV, residing at
the address set forth in Section 3.1 ("Executive") is made and entered as of
January 8, 1999, ("Effective Date").
RECITALS
WHEREAS the Company wishes to employ the Executive, and the Executive is
willing to accept such employment for the Company upon the terms and conditions
hereafter set forth.
NOW THEREFORE, in consideration of the premises and of the respective
covenants and agreements contained herein, the parties hereto agree as follows:
1.1 Engagement. The Company hereby employs the Executive as Chairman of the
Board of Compu-XXXX and as a member of the Company's strategic management team
upon the terms and conditions set forth in this Agreement. If elected to the
Board of Directors of Compu-XXXX and x.XX, the Executive will also serve on the
Board of Directors of Compu-XXXX and x.XX, subject to the terms and conditions
set forth in this Agreement.
1.2 Duties of Executive. As a member of the Company's strategic management
team, the Executive will generally promote the interest of the Company in
accordance with the parameters set forth herein, and participate with other
management executives of the Company to analyze and develop the Company's
business plans and strategies, including the determination of the products and
services to be offered by the Company. As Chairman of the Board of Compu-XXXX,
the Executive may call, and will preside at, meetings of the Board of Directors
in accordance with the Bylaws of Compu-XXXX. The Executive will make himself
reasonably available to act as the Company's spokesperson to the Company's
independent representative sales force, the Company's investors and the public
at large, in each case in such manner as shall be appropriate under the relevant
circumstances.
The Executive shall have the right not to participate or be quoted in press
releases, public statements and comments (jointly and collectively referred to
as "Public Communications") which are materially inaccurate or misleading under,
or do not comply with, applicable state and federal securities laws including,
but not limited to, the Private Securities Litigation Reform Act of 1995 (with
respect to shareholders, lenders or investors) and applicable state and federal
laws and regulations with respect to the sales of business opportunities,
multi-level marketing and similar laws and regulations, and/or he has not had
the opportunity to consult with the Company's legal counsel which is experienced
in federal and state securities laws and regulations, with respect to the
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preparation and legal review of the Public Communication. The foregoing
notwithstanding, the Executive may not invoke any failure or inability to
consult with counsel as a reason not to participate, or be quoted, in a Public
Communication if he has not initiated contact with such counsel's office within
24 hours after the Company requests that he make, or be quoted in, a public
communication.
In addition to and not by limitation of all rights to be indemnified,
defended and held harmless pursuant to the Company's indemnification obligations
under the Company's rules, policies, Bylaws and director and officer liability
insurance coverage, the Company shall indemnify, defend and hold the Executive
harmless from any and all claims and liabilities arising from Public
Communications, whether or not made by him, unless made recklessly or in bad
faith, in connection with his carrying out his responsibilities hereunder.
Notwithstanding any provision of this Agreement to the contrary, the
Executive's rights and legal or fiduciary duties to the Company and its
shareholders as a member of the Company's Board of Directors, under applicable
laws and the Articles and Bylaws of the Company, shall take precedence over any
other duty or responsibility which may otherwise be deemed expressed or implied
under this Agreement, and no action or omission by the Executive in exercising
such rights or carrying our such legal or fiduciary duties shall constitute a
default under this Agreement.
In connection with his duties hereunder the Executive agrees to devote,
best efforts, abilities, knowledge and experience to the faithful performance of
the duties, responsibilities, and authorities within the scope of the parameters
stated above. Notwithstanding the preceding, the Executive shall not engage in
any activity or perform services for any other entity which shall prevent the
Executive from fulfilling his obligations to the Company hereunder. The Company
acknowledges that the Executive has duties, responsibilities and interests
outside the scope of this Employment Agreement, and except as otherwise provided
herein, the Executive is not restricted in pursuing such other duties,
responsibilities and interests.
1.3 Term. This Agreement shall become effective as of the Effective Date
and shall continue in force and effect until December 31, 2001, unless sooner
terminated as provided in Section 1.6 hereof. This Agreement shall automatically
renew for additional one (1) year periods unless either party has given at least
sixty (60) days prior written notice of their intention not to renew.
1.4 Compensation. The Company (either by Compu-XXXX or x.XX) shall pay the
Executive, as full compensation for services rendered by the Executive under the
Agreement, as follows:
(a) Base Salary. The Company shall pay the Executive a base salary of
TWO HUNDRED EIGHT THOUSAND DOLLARS ($208,000.00) per year, or such higher
salary as may be determined from time to time during the term hereof either
in accordance with the provisions of
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Section 1.4(b) hereof or by the Board of Directors of Compu-XXXX in its
sole discretion, prorated for any partial period of employment ("Salary").
Such Salary shall be paid by the Company (either by Compu-XXXX or x.XX) to
the Executive in twenty-six (26) equal installments in accordance with the
regular payroll payment dates of the Company or in such installments and on
such days during the month as the Company and the Executive shall mutually
determine. In the event this agreement renews automatically as provided in
paragraph 1.2 hereof increases in base salary will be a minimum of the
cumulative annual average increase for the prior year as stated in the
consumer price index all urban consumers Jacksonville, Florida Area
publicized by the U.S. Department of Commerce. If such index is terminated
or no longer in existence use of a comparable index will be accepted.
(b) Bonus. In addition to the Salary set forth in Section 1.4(a)
hereof, the Executive shall be entitled to receive a sales and marketing
bonus (the "Bonus") to be determined by the mutual agreement of the
Compu-XXXX and the Executive which, among other things, will allow the
Executive to earn such a Bonus of up to fifty percent (50%) of the
Executive's Salary each year, based on certain performance thresholds. The
Company and the Executive shall use best efforts to determine and
memorialize the terms of the Bonus within thirty (30) days hereof.
1.5 Employment Benefits. In addition to the Salary and the Bonus payable to
the Executive hereunder, the Executive shall be entitled to the following
benefits upon satisfaction by the Executive of the eligibility requirements
therefor, subject to the following limitations:
(a) Sick Leave Benefits and Disability Insurance. Unless this
Agreement is terminated pursuant to the provisions of Section 1.6(b) hereof
and provided that Executive has been employed on a full time basis for a
minimum of three (3) months, the Executive shall be paid sick leave
benefits for a period of up to three (3) months at his then prevailing
Salary rate during his absence due to illness or other incapacity, reduced
by the amount, if any, of worker's compensation, social security
entitlement, or disability benefits, if any, under the Company's group
disability insurance plan, if any.
(b) Life Insurance;" Key Man" Life Insurance. The Company, at its own
expense, shall provide the Executive, subject to the Executive passing any
physical examination required by the Company's insurance company, life
insurance benefits under and consistent with any group term life insurance
plan which Compu-XXXX, at its election, may adopt. Any such life insurance
coverage shall be upon terms and conditions comparable to the coverage, if
any, provided other executive officers of the Company, and provided
further, however, that the Company shall not be obligated to incur a
premium of more than $1,000 per year for any such coverage. In addition,
the Company may obtain "key man" life insurance upon the life of the
Executive in an amount determined by Compu-XXXX in its sole discretion. The
Executive shall fully cooperate in obtaining said life insurance, including
submitting to any physical examination. With respect to such life
insurance, the Executive shall be treated by the Company no differently
than Xxxx Xxxxxxxxxx.
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(c) Hospitalization, Accident, Major Medical and Dental Insurance. The
Company, at its own expense, shall provide the Executive (and all
dependents of the Executive at the request of the Executive) with group
hospitalization, group accident, major medical, and dental insurance in
amounts of coverage comparable to the coverage, if any, provided other
executive officers of the Company.
(d) Intentionally Left Blank.
(e) Working Facilities; Travel. During the term of this Agreement, the
Company shall provide at its expense, adequate office space, furniture,
equipment, supplies, and personnel (including professional, clerical,
support and other personnel) as shall be suitable in the opinion of the
Chief Executive Officer of the Company to the Executive's position and
adequate for the Executive's use in performing his duties and
responsibilities under this Agreement. The Executive shall be based at
x.XX's office at 00000 Xxxx Xxx Xxxxxxx Xxxx, Xxxxxxxx 000, Xxxxxxxxxxxx,
Xxxxxxx or any successor office in the Jacksonville Florida area, and he
shall be required to travel to the Company's offices at 00 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxx and to meet with customers and attend conferences,
conventions and the like from time to time in order for him to carry out
his duties hereunder.
(f) Automobile Allowance. During the term of this Agreement, the
Company shall provide the Executive with a monthly automobile allowance of
one thousand dollars ($1,000). Any allowance due the Executive pursuant to
the preceding provisions of this paragraph shall be paid by the Company
concurrently with payroll.
(g) Upon signing this Agreement in connection with the Executive
becoming Chairman of the Board of Compu-XXXX and a Director of the Company,
Compu-XXXX shall grant to the Executive common Stock purchase options to
purchase the number of shares of common stock of Compu-XXXX upon the terms
and conditions set forth in the stock option agreement attached hereto as
Exhibit 1.5(g).
1.6 Termination. This Agreement and the Executive's employment hereunder
may be terminated without any breach of this Agreement at any time during the
term hereof only by reason of and in accordance with the following provisions:
(a) Death. If the Executive dies during the term of this Agreement and
while in the employ of the Company, this Agreement shall automatically
terminate as of the date of the Executive's death, and the Company shall
have no further liability hereunder to the Executive or his estate except
to the extent set forth in Section 1.7(a) hereof.
(b) Disability. If, during the term of this Agreement, the Executive
shall be prevented from performing his duties hereunder by reason of
becoming totally disabled as hereinafter defined for six (6) months out of
twelve (12) month period, then the Company may terminate this Agreement
immediately upon written notice to the Executive
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without any further liability hereunder to the Executive except as set
forth in Section 1.7(b) hereof. For purposes of this Agreement, the
Executive shall be deemed to have become disabled when (i) he either
receives "disability benefits" under (a) Social Security, or (b) the
Companys disability plan, if any (whether funded with insurance or
self-funded by the Company), or (ii) the Board of Directors of the Company,
upon the written report of a qualified physician (after complete
examination of the Executive) designated by the Board of Directors of
Compu-XXXX or its insurers, shall have determined that the Executive has
become physically and/or mentally incapable of performing his duties under
this Agreement.
(c) Termination by the Company for Cause. Prior to the expiration of
the term of this Agreement, the Company may discharge the Executive for
cause and terminate this Agreement immediately upon written notice to the
Executive without any further liability hereunder to the Executive or his
estate, except to the extent set forth in Section 1.7(c) hereof. For
purposes of this Agreement, a "discharge for cause" shall mean termination
of the Executive upon written notice to the Executive limited, however, to
one or more of the following reasons:
(1) Misappropriation or embezzlement by the Executive in
connection with the Company as determined by the affirmative unanimous
vote of the Board of Directors of Compu-XXXX other than the Executive;
(2) Gross mismanagement or willful neglect of the Executive's
duties as determined by the affirmative unanimous vote of the Board of
Directors of Compu-XXXX (other than the Executive) after notice to the
Executive of the particular details thereof and a period of thirty
(30) days thereafter within which to cure such act or acts of
mismanagement or neglect, and the failure of the Executive to cure
such act or acts within such thirty (30) day period;
(3) Indictment and conviction of a felony; or
(4) Willful and unauthorized disclosure of Trade Secrets (as
defined in Section 1.8 hereof) of the Company as determined by the
affirmative unanimous vote of the Board of Directors of the Company,
other than the Executives.
(d) Termination by the Company with Notice. The Company may terminate
this Agreement, for a reason other than as set forth in subparagraphs (a),
(b), (c) or (f) of this Section 1.6 at any time immediately upon written
notice to the Executive without any further liability hereunder to the
Executive except to the extent set forth in Section 1.7(d) hereof.
(e) Termination by the Executive for Good Reason. The Executive may
terminate this Agreement at any time for Good Reason (as hereinafter
defined)
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in which event the Company shall have no further liability hereunder to the
Executive except to the extent set forth in Section 1.7(e) hereof. For
purposes of this Agreement, the term "Good Reason" shall mean, without the
Executive's express written consent, the occurrence of any the following
circumstances (which changes shall constitute a "Change"):
(1) The assignment to the Executive of any duties inconsistent in
any material respect (unless in the nature of a promotion) with the
Executive's position in the Company immediately prior to such Change
(including, but not limited to, the Executive's status, offices and
titles), or a significant adverse alteration or diminution in the
nature or status of the Executive's authority, duties or
responsibilities from those in effect immediately prior to such
Change, other than an isolated, insubstantial and inadvertent action
that is fully corrected within thirty (30) days after receipt of
written notice from the Executive;
(2) Any material failure by the Company to comply with any of the
provisions of Section 1.4 or 1.5 of this Agreement, other than an
isolated, insubstantial and inadvertent action that is fully corrected
within thirty (30) days after receipt of written notice from the
Executive;
(3) The Company's requiring the Executive to be based anywhere
other than within a reasonable travel distance from Jacksonville,
Florida, except as provided in Section 1.5(e) hereof and except for
travel reasonably required of the Executive in the performance of the
Executive's duties on behalf of the Company;
(4) The failure of the Company to obtain an agreement,
satisfactory to the Executive, from any and all successors to assume
and agree to perform this Agreement, as contemplated in Section 1.9
hereof;
(5) Any failure by the Company to comply with any material
provision of this Agreement that has not been cured within thirty (30)
days after notice of such noncompliance has been given by the
Executive to the Company;
(6) A "Change in Control" (as that term is defined in Section
1.6(f) hereof) of the Company has occurred; or
(7) If the Company changes its business direction such that the
primary focus of its business is not in the e-commerce,
telecommunications or internet industries or the multi-level marketing
of the products and services of such industries, and the Executive
resigns as Chairman of the Board of Compu-XXXX or provides notice that
he wishes to terminate this Agreement.
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During a period of six (6) months immediately following any such
termination of this Agreement by the Executive, the Executive agrees
to provide such consulting services to the Company as it may
reasonably request, at such time or times within such period as may be
mutually agreed upon between the Company and the Executive. The
Executive shall be compensated for any such consulting services at a
daily rate equal to one thirtieth (1/30) of the monthly Salary paid to
the Executive at the time of the Executive's resignation from the
Company, plus reimbursement for any reasonable out-of-pocket expenses
incurred by the Executive in rendering such consulting services.
(f) Termination upon Change in Control. The Company may terminate this
Agreement at any time within twelve (12) months after a Change in Control
(as hereinafter defined) immediately upon written notice to the Executive
without any further liability hereunder to the Executive except to the
extent set forth in Section 1.7(e) hereof. For purposes of this Agreement,
the terms "Change of Control" shall mean, except in connection with, or in
relation to, a capital raising transaction:
(1) The transfer, through one transaction or a series of related
transactions, either directly or indirectly, or through one or more
intermediaries, of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Securities Exchange Act of 1934) of 25% or
more of either the then outstanding shares of common stock or the
combined voting power of Compu-DAWN's then outstanding voting
securities entitled to vote generally in the election of directors, or
the last of any series of transfers that results in the transfer of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) of 25% or more of either
the then outstanding shares of common stock or the combined voting
power of Compu-DAWN's then outstanding voting securities entitled to
vote generally in the election of directors;
(2) Approval by the shareholders of Compu-XXXX of a merger or
consolidation, with respect to which persons who were the shareholders
of Compu-XXXX immediately prior to such merger or consolidation do
not, immediately thereafter, own more than 50% of the combined voting
power entitled to vote generally in the election of directors of the
merged or consolidated company's then outstanding voting securities,
or a liquidation or dissolution of the Company or the sale of all or
substantially all of the assets of the Company;
(3) The transfer, through one transaction or a series of related
transactions, of more than 50% of the assets of the Company, or the
last of any series of transfers that results in the transfer of more
than 50% of the assets of the Company. For purposes of this paragraph,
the determination of what constitutes more than 50% of the assets of
the Company shall be determined based on the most recent financial
statement prepared by the Company's independent accountants; or
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(4) During any calendar year, individuals who at the beginning of
such year constituted the Board of Compu-XXXX and any new director or
directors whose election by the Board was approved by a vote of a
majority of the directors then still in office who either were
directors at the beginning of the year or whose election or nomination
for election was previously so approved, cease for any reason to
constitute a majority thereof provided, however, that this provision
will not be triggered in the event the Executive votes or causes other
stockholders to vote their shares to cause said change to the
directorship of the Company.
1.7 Compensation upon Termination.
(a) Death. In the event the Executive's employment hereunder is
terminated pursuant to the provisions of Section 1.6 (a) hereof due to the
death of the Executive, the Company shall have no further obligation to the
Executive or his estate, except to pay to the Executive's spouse, or if he
leaves no spouse, to the estate of the Executive (provided, however, that
the Executive, with the written consent of the Executive's spouse, if any,
may affirmatively designate a beneficiary other than his spouse or estate):
(i) any accrued, but unpaid, Salary, any authorized but unreimbursed
business expenses, and any vacation or sick leave benefits, which have
accrued as of the date of death, but were then unpaid or unused, (ii) any
accrued, but unpaid, Bonus but without accelerating the bonus payment date,
and (iii) an amount equal to the difference between (a) the full monthly
Salary payable hereunder as of the date of death of the Executive for a
period consisting of that number of months equal to one (1) month
multiplied by the number of full years that the Executive was an employee
of the Company or a subsidiary or a predecessor in interest thereof, and
(b) the monthly payment, if any, payable to the Executive under the
Company's salary continuation plan, if any, for the corresponding month
during the period set forth in clause (iii)(a) above. Any amount due the
Executive under clause (i) of this paragraph shall be paid in a lump sum in
cash within thirty (30) days after the death of the Executive, and any
amount due the Executive under clause (ii) of this paragraph shall be paid
in accordance with the Discretionary Bonus Resolution; provided, however,
that any unpaid Earnings Annual Bonus shall be paid to the Executive within
thirty (30) days after the Company's audited financial statements for the
fiscal year is made available by the Company's auditors for which such
Bonus is due.
(b) Disability. In the event the Executive's employment hereunder is
terminated pursuant to the provisions of Section 1.6(b) hereof due to the
Disability of the Executive, the Company shall be relieved of all of its
obligations under this Agreement, except to pay the Executive (i) any
accrued, but unpaid Salary and any authorized but unreimbursed business
expenses, (ii) any accrued, but unpaid, Bonus but without accelerating the
bonus payment date, and (iii) an amount equal to the difference between (a)
the full monthly Salary payable hereunder as of the date of termination of
the Executive's employment hereunder for a period consisting of that number
of months equal to one (1) month multiplied by the number of full years
that the Executive was an employee of the Company or a subsidiary or
predecessor in interest thereof, and subject to a minimum of three (3)
months (b) the monthly
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payment, if any, payable to the Executive under the Company's salary
continuation plan and/or disability plan, if any, for the corresponding
month during the period set forth in clause (iii)(a) above. The provisions
of the preceding sentence shall not affect the Executive's rights to
receive payments under the Company's disability insurance plan, if any. Any
amount due the Executive under clause (i) of this paragraph shall be paid
in a lump sum in cash within thirty (30) days after the termination of the
Executive's employment hereunder, any amount due the Executive under clause
(ii) of this paragraph shall be paid within thirty (30) days after the
Company's audited financial statements for the fiscal year is made
available by the Company's auditors for which such Bonus is due, and any
amount due the Executive under clause (iii) of this paragraph shall be paid
in accordance with the Company's regular payroll periods during the period
set forth in clause (iii).
(c) Cause. In the event the Executive's employment hereunder is
terminated by the Company for Cause pursuant to the provisions of Section
1.6(c) hereof, the Company shall have no further obligation to the
Executive under this Agreement except to pay the Executive (i) any accrued,
but unpaid, Salary and any authorized but unreimbursed business expenses,
and (ii) any accrued, but unpaid, Bonus, but without accelerating the bonus
payment date. Any amount due the Executive under clause (i) of this
paragraph shall be paid in a lump sum in cash within thirty (30) days after
the termination of the Executive's employment hereunder, and any amount due
the Executive under clause (ii) of this Paragraph shall be paid within
thirty (30) days after the Company's audited financial statements for the
fiscal year is made available by the Company's auditors for which such
Bonus is due.
(d) Termination by the Company other than for Cause. In the event the
Executive's employment hereunder is terminated by the Company pursuant to
the provisions of Section 1.6(d) hereof, the Executive shall be entitled to
receive (i) any accrued, but unpaid Salary and any authorized but
unreimbursed business expenses, (ii) any accrued, but unpaid, Bonus, and
(iii) an amount equal to One Hundred (100%) percent of the full monthly
Salary payable hereunder for the unexpired term of the Agreement. Any
amount due the Executive under clause (i) of this paragraph shall be paid
in a lump sum in cash within thirty (30) days after the termination of the
Executive's employment thereunder, any amount due the Executive under
clause (ii) of this paragraph shall be paid to the Executive within thirty
(30) days after the Company's audited financial statements for the fiscal
year is made available by the Company's auditors for which such Bonus is
due, and any amount due the Executive under clause (iii) of this paragraph
shall be paid in accordance with the Company's regular payroll periods
during the period set forth in clause (iii).
(e) Termination by the Executive for Good Reason or by the Company
After Change in Control. In the event this Agreement is terminated by the
Executive pursuant to the provisions of Section 1.6(e) hereof, or by the
Company pursuant to Section 1.6(f) hereof, the Executive shall be entitled
to receive (i) any accrued, but unpaid, Salary and any authorized but
unreimbursed business expenses, (ii) any accrued, but unpaid Bonus, and
(iii) an amount
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equal to One Hundred (100%) percent of the full monthly Salary payable
hereunder for the unexpired term of the Agreement. Any amount due the
Executive under clause (i) of this paragraph shall be paid in a lump sum in
cash within thirty (30) days after the termination of the Executive's
employment hereunder, any amount due the Executive under clause (ii) of
this paragraph shall be paid within thirty (30) days after the Company's
audited financial statements for the fiscal year is made available by the
Company's auditors for which such Bonus is due and (iii) any amount due the
Executive under clause (iii) of this paragraph (A) in the event this
Agreement is terminated pursuant to Section 1.6(e) shall be paid in
accordance with the Company's regular payroll periods during the period set
forth in clause (iii), and (B) in the event this Agreement is terminated by
the Company pursuant to Section 1.6(f) shall be paid in a lump sum in cash
within ninety (90) days after the termination of the Executive's employment
hereunder. In addition, in the event this Agreement is terminated by the
Executive pursuant to the provisions of Section 1.6(e) hereof, or by the
Company pursuant to Section 1.6(f) hereof, the Company at its expense shall
continue to provide the Executive with the benefits set forth in Section
1.5(b) relating to term life insurance, 1.5(c) and 1.5(f) above for the
unexpired term of this Agreement; provided, however, if the Executive
received such benefits from a source other than the Company during the
aforesaid period, then the Company shall continue to provide the benefits
set forth in Sections 1.5(b) relating to term life insurance, 1.5(c) and
1.5(f) hereof, or provide the Executive with the equivalent of such
benefits if the Company is precluded from providing such actual benefits,
only to the extent the Executive does not receive such benefits in their
entirety from such other source.
(f) Termination of Obligations of the Company Upon Payment of
Compensation. Upon payment of the amount, if any, due the Executive
pursuant to the preceding provisions of this Section, the Company shall
have no further obligation to the Executive under this Agreement.
1.8 Protective Covenants. The Executive recognizes that his employment by
the Company is one of the highest trust and confidence because (i) the Executive
will become fully familiar with all aspects of the Company's business and that
of its subsidiaries during the period of his employment with the Company, and
(ii) certain information of which the Executive will gain knowledge during his
employment is proprietary and confidential information which is of special and
peculiar value to the Company or its subsidiaries (the "Proprietary
Information"). If any such Proprietary Information were imparted to or became
known by any person, including the Executive, engaging in a business in
competition with that of the Company or its subsidiaries, hardship, loss and
irreparable injury and damage could result to the Company or its subsidiaries,
the measurement of which would be difficult if not impossible to ascertain. The
Executive acknowledges that any and all Proprietary Information shall be the
sole and absolute property of the Company in perpetuity, that the Executive
shall promptly disclose such Proprietary Information to the Company, and the
Executive shall have no right, title or interest therein or to receive
additional monies therefor. The Executive shall provide reasonable assistance to
the Company in developing and protecting all such Proprietary Information and
obtaining patents on such Proprietary Information deemed patentable by the
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Company. The Executive further acknowledges that the Company or its subsidiaries
has developed unique skills, concepts, sales presentations, marketing programs,
marketing strategy, business practices, methods of operation, trademarks,
licenses, technical information, Proprietary Information, computer software
programs, tapes and discuss concerning its operations systems, customer lists,
customer leads, documents identifying past, present and future customers, hiring
and training methods, investment policies, financial and other confidential and
proprietary information concerning its operations and expansion plans ("Trade
Secrets"), including, without limitation, such Trade Secrets acquired from
LocalNet Communications, Inc., a Florida corporation ("LocalNet") pursuant to a
Peaceful Surrender Agreement of even date between x.XX and LocalNet. Therefore,
the Executive agrees that it is necessary for the Company to protect its
business and that of its subsidiaries from such damage, and the Executive
further agrees that the following covenants constitute a reasonable and
appropriate means, consistent with the best interest of both the Executive and
the Company, to protect the Company or its subsidiaries against such damage and
shall apply to and be binding upon the Executive as provided herein:
(a) Trade Secrets. The Executive recognizes that his position with the
Company is one of the highest trust and confidence by reason of the
Executive's access to and contact with certain Trade Secrets of the Company
and its subsidiaries. The Executive agrees and covenants to use his best
efforts and exercise utmost diligence to protect and safeguard the Trade
Secrets of the Company and its subsidiaries. The Executive further agrees
and covenants that, except as may be required by the Company in connection
with this Agreement, or with the prior written consent of the Company, the
Executive shall not, either during the term of this Agreement or
thereafter, directly or indirectly, use for the Executive's own benefit or
for the benefit of another, or disclose, disseminate, or distribute to
another, any Trade Secret (whether or not acquired, learned, obtained, or
developed by the Executive alone or in conjunction with others) of the
Company or its subsidiaries or of others with whom the Company or its
subsidiaries has a business relationship. All memoranda, notes, records,
drawings, documents, or other writings whatsoever made, compiled, acquired,
or received by the Executive during the term of this Agreement, arising out
of, in connection with, or related to any activity or business of the
Company or its subsidiaries, including, but not limited to, the customers,
suppliers, or others with whom the Company or its subsidiaries has a
business relationship, the arrangements of the Company or its subsidiaries
with such parties, and the pricing and expansion policies and strategy of
the Company or its subsidiaries, are, and shall continue to be, the sole
and exclusive property of the Company or its subsidiaries, are, and shall
continue to be, the sole and exclusive property of the Company or its
subsidiaries, as applicable, and shall, together with all copies thereof
and all advertising literature, to be returned and delivered to the Company
by the within five (5) days of the termination of this Agreement, or at any
time upon the Company's demand.
(b) Inventions as Sole Property of Company. Executive agrees promptly
to disclose to the Company any and all inventions, ideas, discoveries,
improvements, trade secrets, formulas, techniques, processes, developments,
know how, and writings or other
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materials, whether or not patentable and whether or not reduced to
practice, conceived, made or learned by the Executive during the period of
his/her employment, either alone or jointly with others, which relate to
the Company's business of developing, and selling through a multi-level
market sales network using independent representatives, e-commerce,
telecommunications and internet products and services (such inventions,
ideas, discoveries, improvements, trade secrets, formulas, techniques,
processes, developments know-how, and writings or other materials being
hereinafter collectively referred to as the "Inventions"). Executive
acknowledges and agrees that all the Inventions (including all rights of
copyright therein) shall be the sole property of the Company or any other
entity designated by it, and the Executive hereby assigns to the Company
his/her entire right and interest in and to all the Inventions. The Company
or any other entity designated by it shall be the sole owner of all
domestic and foreign rights pertaining to the Inventions.
(c) Restriction on Soliciting Certain Persons of the Company and its
Subsidiaries. The Executive covenants that during the term of this
Agreement and for a period of twenty-four (24) months following the
termination of this Agreement, he will not, either directly or indirectly,
(i) disclose or otherwise make known to any person or entity the names and
addresses of any of the customers, suppliers, vendors, sales
representatives, distributors, employees, or consultants of the Company, or
(ii) call on, solicit, or take away, or attempt to call on, solicit or take
away any of the customers, suppliers, vendors, sales representatives,
distributors, employees, or consultants of the Company, or its subsidiaries
with whom he became acquainted during his employment with the Company,
either for himself or for any other person, firm, corporation or other
entity.
(d) Covenant Not to Compete. The Executive hereby covenants and agrees
that during the term of this Agreement and for a period of twelve (12)
months following the termination, of his employment hereunder, he will not
directly or indirectly, either as an employee, employer, consultant, agent,
principal, partner, shareholder (other than through ownership of public
traded capital stock of a corporation which represent less than five
percent (5%) of the outstanding capital stock of such corporation),
corporate officer, director, investor, financier or in any other individual
or representative capacity, engage or participate in any business during
the term of this Agreement and as of the date of termination of the
Executive's employment hereunder which is directly competitive with the
business of the Company or any of its subsidiaries in the areas of
e-commerce, telecommunications and internet services and products and
multi-level marketing as of such date.
(e) Survival of Covenants. Each covenant of the Executive set forth in
this Section 1.8 shall survive the termination of this Agreement and shall
be construed as an agreement independent of any other provision of this
Agreement, and the existence of any claim or cause of action of the
Executive against the Company whether predicated on this Agreement or
otherwise shall not constitute a defense to the enforcement by the Company
of said covenant.
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(f) Remedies. In the event of breach or threatened breach by the
Executive of any provision of this Section 1.8, the Company shall be
entitled to relief by temporary restraining order, temporary injunction, or
permanent injunction or otherwise, in addition to other legal and equitable
relief to which it may be entitled, including any and all monetary damages
which the Company may incur as a result of said breach, violation or
threatened breach or violation. The Company may pursue any remedy available
to it concurrently or consecutively in any order as to any breach,
violation, or threatened breach or violation, and the pursuit of one of
such remedies at any time will not be deemed an election of remedies or
waiver of the right to pursue any other of such remedies as to such breach,
violation, or threatened breach or violation, or as to any other breach
violation, or threatened breach or violation.
However, in the event the Company commences an action and does not
prevail, the Company shall pay the Executive all reasonable legal costs and
expenses in connection with the defense or any action brought by the
Company against him.
1.9 Merger or Acquisition. In the event the Company should consolidate, or
merge into another corporation, or transfer all or substantially all of its
assets to another entity, or divide its assets among a number of entities, this
Agreement shall continue in full force and effect. The Company will require any
and all successors (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, to expressly assume and agree pursuant to an appropriate
written assumption agreement to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such successor shall be a breach of this
Agreement and shall entitle the Executive to terminate his employment and this
Agreement for Good Reason. As used in this Agreement, the term "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which executes and delivers the assumption agreement
provided for in this Section 1.9 or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law.
1.10 Reimbursement of Employee Expenses. The Executive is authorized to
incur ordinary, necessary and reasonable expenses in connection with the
performance of his duties and responsibilities under this Agreement and for the
promotion of the business and activities of the Company during the term hereof,
including, without limitation, expenses for necessary travel and necessary
travel and entertainment and other items of expenses required in the normal and
routine course of the Executive's employment hereunder. The Company will
reimburse the Executive from time to time of at least $500.00 per month incurred
which will cover miscellaneous expenses of the Executive incidental to the
performance of his duties hereunder. Additionally, the Company will reimburse
the Executive from time to time for all such expenses above $500.00 in the
aggregate each month provided that the Executive presents to the Company with
respect thereto:
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(a) An accounting in which the Executive recorded at or near the time
each expenditure was made; (i) the amount of the expenditures, (ii) the
time, place and designation of the type of entertainment and travel or
other expenses, or the date and description of the gift (gifts made to one
individual are not to exceed a total of Twenty-Five and No/100 Dollars
($25.00) in any taxable year); (iii) the business reason for the
expenditure and the nature of the business benefit derived or expected to
be derived as the result of the expenditure; and (iv) the names,
occupations, addresses and other information concerning each person who was
entertained or given a gift sufficient to establish the business
relationship to the Company; and
(b) Documentary evidence (such as receipts or paid bills) which state
sufficient information to establish the amount, date, place and essential
character of the expenditure, for such expenditure (i) of Twenty-Five and
No/100 Dollars ($25.00) or more except for transportation charges if not
readily available) and (ii) for lodging or traveling away from home.
1.11 Executive's Securities Law Covenants. The Executive covenants that he
will comply with all securities laws, rules and regulations pertaining to his
employment hereunder, to the extent any such laws, rules and regulations
applies, including, without limitation, filing all reports required by Section
16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
complying with Section 16(b) of the Exchange Act relating to short swing
profits, and refraining on using "insider information" or disclosing same to any
third party who is not the Company's retained counsel, accountants or investment
bankers, or who is not bound by a confidentiality agreement with the Company,
except if any of the forgoing is demonstrably inadvertent by the Executive and
does not have a material adverse affect on the Company's business, reputation,
financial condition, investor or public relations, creditor, customer or
supplier relations, or relationships with other contracting parties, or
independent sales representative relations. Additionally, the Executive will, at
the request of the Company, provide the Company with all information regarding
the Executive on a timely basis which is reasonably required by Compu-XXXX to
complete it's reports and statements required by the Exchange Act, or to
complete any registration statement or amendments thereto which Compu-XXXX files
or plans to file with the Securities and Exchange Commission.
2.1 Post Termination Transition Period. Following the termination or
expiration of this Agreement for any reason whatsoever, there shall be a
reasonable transition period (the "Transition Period") during which the Company
will take steps to disassociate itself from the name and the likeness of the
Executive. During the Transition Period the Company shall use diligent efforts
to revise any letterhead, brochures, sales and marketing literature, public
relations materials, web sites or the like, whether printed or electronic, to
remove the name, picture and likeness of the Executive therefrom, unless the
Executive gives his prior written consent to the contrary. During the Transition
Period, subject to the foregoing sentence, the Company may use the Executive's
name, picture and likeness in existing materials, consistent with then past
practice, provided such use is not misleading, or disparaging or damaging to the
Executive. Following the Transition Period, the Company shall not use the name,
picture or likeness of the Executive without the Executive's prior
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written consent, except as may be required by law, rule or regulation
(including, without limitation, federal and state securities laws) or in an
historical context. During such Transition Period, to the extent that the
Executive is called upon by the Company to assist the Company in making the
afordescribed transition, the Executive shall be compensated for any such
services on a per diem basis at a daily rate equal to one thirtieth (1/30) of
the monthly Salary paid to the Executive at the time of the Executive's
termination from the Company, plus reimbursement for any reasonable
out-of-pocket expenses incurred by the Executive in rendering such services.
3.1 Covenants of Compu-XXXX. Within ten (10) days following the execution
and delivery of this Agreement Compu-XXXX shall use its best efforts to cause
the Board of Directors to expand the Board of Directors to seven (7), and shall
cause the following persons to continue to serve as directors or to be elected
by the incumbent directors to fill vacancies caused by the increase in the size
of the Board of Directors or the resignation of certain current directors, as
the case may be, and subject to their respective consent to so serve, effective
upon Compu-DAWN's compliance Rule 14 f-1 promulgated under the Exchange Act
("Rule 14f-1"): Xxxx Xxxxxxxxxx, Xxxxx Xxxxx, Xxxx X. Theale, Jr., R.E. Xxxxxx
IV, one person designated by Messrs. Honigsfeld and Libin, one person designated
by Messrs. Theale and Xxxxxx, and one person mutually agreed to by Messrs.
Honigsfeld, Libin, Theale and Xxxxxx. Compu-XXXX shall use best efforts to
comply with Rule 14f-1 within thirty (30) days following the date hereof,
subject to the persons who are contemplated to become new directors of
Compu-XXXX as provided above furnishing Compu- XXXX, within fifteen (15) days of
the date hereof with the information required by Compu- XXXX to accurately
complete the statement required to comply with Rule 14f-1. In that regard,
Compu-XXXX has sent, or will send within seven (7) days of the date hereof, to
the Executive, a Director and Officer Questionnaire designed to elicit the
required information for the information statement required by Rule 14f-1.
This covenant is subject to the stockholder's and Board of Directors rights
and duties to remove any director for cause pursuant to law, or Compu-DAWN's
certificate of incorporation and bylaws and to fulfill the directors fiduciary
duties. This covenant shall expire following the next Annual Meeting of
Stockholders of Compu-XXXX at which elections for the class of directors
including any of Messrs. Honigsfeld, Libin, Theale or Xxxxxx are to be held,
with respect to each of them.
GENERAL PROVISIONS
4.1 Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be deemed to have been
delivered on the date personally delivered or on the date deposited in a
receptacle maintained by the United States Postal Service for such purpose,
postage prepaid, by certified mail, return receipt requested, addressed to the
respective parties as follows:
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If to the Executive:
000 Xxxxxxxxxxxxx Xxxx
Xxxxx Xxxxx Xxxxx, Xxxxxxx 00000
If to the Company:
Compu-Xxxx, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
ATTN: Xxxx Xxxxxxxxxx,
Chairman of the Board
Either party hereto may designate a different address by providing written
notice of such new address to the other party hereto.
4.2 Severability. If any provision contained in this Agreement is
determined to be void, illegal or unenforceable, in whole or in part, then the
other provisions contained herein shall remain in full force and effect as if
the provision which was determined to be void, illegal, or unenforceable had not
been contained herein.
4.3 Waiver, Modification, and Integration. The waiver by any party hereto
of a breach of any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach by any party. This instrument contains the
entire agreement of the parties concerning employment and supersedes all prior
and contemporaneous representations, understandings and agreements, either oral
or in writing, between the parties hereto with respect to the employment of the
Executive by the Company and all such prior or contemporaneous representations,
understandings and agreements, both oral and written, are hereby terminated
provided, however that the terms and conditions of that separate Confidential
Proprietary Information Agreement entered into by and between the Company and
the Executive shall control with respect to the subject matter thereof. The
terms of this Agreement may not be modified, altered or amended except by
written agreement of the Executive and the Company, subject to the prior
approval of the Board of Directors of the Company.
4.4 Binding Effect. This Agreement shall be binding and effective upon the
Company and its successors and permitted assigns, and upon the Executive, his
heirs and representatives.
4.5 Choice of Law and Venue. The parties agree that this Agreement is made
and entered into in Nassau County, New York and shall be governed by and
construed in accordance with the laws of the State of New York.
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4.6 Representation of Executive. The Executive hereby represents and
warrants to the Company that he has not previously assumed any obligations
inconsistent with those contained in this Agreement. The Executive further
represents and warrants to the Company that the Executive has entered into this
Agreement pursuant to his own initiative and that the Company did not induce the
Executive to execute this Agreement in contravention of any existing
commitments. The Executive acknowledges that the Company has entered into this
Agreement in reliance upon the foregoing representations of the Executive.
4.7 Independent Counsel. The Company has been represented by CERTILMAN
BALIN XXXXX & XXXXX, LLP. The Executive has been represented by BRANT, MOORE,
XXXXXXXXX & XXXXX, P.A. Each has made his or its own determination with respect
to counsel without coercion from the other. Each has thoroughly reviewed the
provisions of this Agreement and all matters concerning the consulting with the
benefit of independent counsel.
4.8 Arbitration Any controversy or claim arising out of or relating to this
Agreement shall be settled by binding arbitration in Nassau County, New York
under the rules of the American Arbitration Association. Judgment upon the award
may be entered in any court having jurisdiction. Arbitrator(s) may not award the
prevailing party in such arbitration attorney's fees, expenses and costs of
arbitration, except as otherwise provided with respect to restrictive covenants
set forth in Section 1.8(f).
4.9 Counterpart Execution; Originals. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute but one and the same instrument.
[Rest of Page Intentionally Left Blank. Signatures are on the Following
Page.]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written effective as of the Effective Date.
COMPU-XXXX, INC.
By:/s/ Xxxx Xxxxxxxxxx
----------------------
XXXX XXXXXXXXXX
Chief Executive Officer
x.XX COMMERCE, INC.
By: /s/ Xxxx Xxxxxxxxxx
-----------------------
EXECUTIVE:
/s/ R.E. Xxxxxx, IV
--------------------------
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Xxxx Xxxxxxxxxx and Xxxxx Xxxxx hereby each agree that he will vote in
favor of the matters set forth in Section 2.1 of the Employment Agreement dated
January 8, 1999 between Compu-XXXX, Inc. and x.XX Commerce, Inc. and Xxxxxx X.
Xxxxxx XX.
/s/ Xxxx Xxxxxxxxxx
----------------------------
Xxxx Xxxxxxxxxx
/s/ Xxxxx Xxxxx
----------------------------
Xxxxx Xxxxx
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EXHIBIT 1.5(g)
FORM OF STOCK OPTION AGREEMENT
See attached.
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