Exhibit 10.5
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") is made this 14th day of June,
1999 (the "Effective Date") by Xxxxxx Communications, Inc., a Delaware
corporation with its principal place of business at 0000 Xxxxxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxx 00000 (the "Corporation"), and Xxxx Xxxxxx, residing at 00
Xxxxxxx Xxxx Xxxx, Xxxxxxxxx 0X, Xxx Xxxx, XX 00000, (the "Executive"). The
Corporation, and/or its assignee, shall be referred to herein as the "Employer".
WHEREAS, the parties wish to set forth the terms and conditions upon which
the Employer will employ the Executive;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Position; Title; Duties
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The Employer hereby employs the Executive, and the Executive hereby accepts
employment with the Employer, in the capacity of Group President of Xxxxxx
Healthcare, upon the terms set forth in this Agreement. The Executive's
employment with the Employer shall commence on June 21, 1999. The Executive
shall report initially directly to the President and Chief Operating Officer of
Xxxxxx Communications, Inc., Xxxxxxx X. Xxxxxx, or such other person as may be
designated by her, who shall have the authority to direct, control, and
supervise the activities of the Executive. The Executive shall perform such
services consistent with his position as may be assigned to him from time to
time by such person.
It is anticipated that this Agreement will be assigned to a new corporate
entity which has not yet been formed. For purposes of this Agreement, the
to-be-formed-corporate entity shall be referred to throughout as "Xxxxxx
Healthcare". Upon assignment of this Agreement to Xxxxxx Healthcare, Executive
shall report to the Board of Directors at Xxxxxx Healthcare and shall become a
member of such Board of Directors. At such time, Executive shall serve as Chief
Executive Officer of Xxxxxx Healthcare and shall perform services consistent
with that position and as may be assigned to him from the Xxxxxx Healthcare
Board of Directors.
2. Extent of Services
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The Executive agrees to devote his entire business time and attention to
the performance of his duties under this Agreement. He shall perform his duties
to the best of his ability and shall use his best efforts to further the
interests of the Employer. The Executive shall perform his duties in the
Employer's Maryland and New Jersey
metropolitan area offices and will be required to travel as necessary to perform
the services required of him under this Agreement. It is understood that the
Executive will maintain his principle residence in New York City and it is
anticipated that his principal place of business will be in the New York - New
Jersey metropolitan area. The Executive represents and warrants to the Employer
that he is able to enter into this Agreement and that his ability to enter into
this Agreement and to fully perform his duties hereunder are not limited to or
restricted by any agreements or understandings between the Executive and any
other person. For the purposes of this Agreement, the term "person" means any
natural person, corporation, partnership, limited liability partnership, limited
liability Company, or any other entity of any nature.
Employer recognizes that a reasonable portion of the Executive's business
time will be utilized through July 31, 1999 to effect a reasonable transition
with his former employer.
3. Base Salary
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The Employer shall pay the Executive a base annual salary of $425,000.
This salary shall be payable in biweekly installments minus such deductions as
may be required by law or reasonably requested by the Executive. The Employer
will review the Executive's base salary no less often than annually in
conjunction with its regular review of executive salaries.
4. Bonus
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The Executive shall be eligible for a bonus in each calendar year, based on
the Executive's success in reaching or exceeding performance objectives as
determined by the President and Chief Operating Officer or her designee, or the
Board of Directors of Xxxxxx Healthcare. The amount of such bonus, if any, will
be determined in the discretion of the Employer, but not to exceed $125,000.
With respect to the Stock Loan referred to in paragraph 7(c) below, the
Employer agrees to also pay Executive an additional bonus equivalent to any
interest repaid to the Employer pursuant to said paragraph. This additional
bonus shall be payable at the time Executive's calendar year bonus is paid to
Executive.
5. Term of Employment
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The Executive is an employee "at will" and may be terminated by the
Employer at any time with or without cause.
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6. Stock Options and Restricted Stock
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(a) Initial Grant.
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The Executive shall be granted by Xxxxxx Healthcare nonqualified stock
option(s) valued at a gross exercise price of $4,000,000 for the purchase of
shares of the common stock of Xxxxxx Healthcare with an exercise price equal to
the value of the common stock of Xxxxxx Healthcare as set forth below. These
stock options will be issued after the adoption of the Xxxxxx Healthcare stock
incentive plan, but in advance of the date on which Xxxxxx Healthcare becomes a
publicly traded company. The value of Xxxxxx Healthcare will be determined by a
valuation prepared on behalf of the Compensation Committee of Xxxxxx
Communications, Inc.
Executive shall enter into a stock option agreement which shall provide for
the grant of the shares and shall provide that the option(s) shall vest at the
rate of twenty-five (25%) per year on each anniversary of the date of grant,
provided that the Executive continues to be employed by the Employer on each
such anniversary date, such that all such stock options shall be fully vested
on the fourth anniversary of such date.
In the event there is a change in control in Xxxxxx Healthcare, Executive's
vesting will be accelerated so he is fully vested in the Initial Grant. For the
purposes hereof, a "change in control" is defined as a sale, transfer or other
disposition of all or substantially all of the assets of Xxxxxx Healthcare, at a
time of which it is a publicly traded corporation, or of Xxxxxx Communications,
Inc. if Xxxxxx Healthcare is not a publicly traded corporation, or the
consummation of a merger or consolidation of Xxxxxx Healthcare which results in
the stockholders of Xxxxxx Healthcare immediately prior to such transaction
owning, in aggregate, less than a majority of the surviving or resulting entity.
(b) Restricted Grant
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The Executive shall also be granted by Xxxxxx Healthcare restricted stock
valued at $2,500,000.00 (determined in the same manner as the exercise price is
determined under 6a. above) for shares of common stock of Xxxxxx Healthcare.
Executive shall enter into a Restricted Stock Agreement which shall provide
that such restricted shares shall vest as follows:
(1) Twenty percent (20%) on the grant date; and
(2) Twenty percent (20%) on the first and each successive
anniversary date of the date on which Xxxxxx Healthcare
becomes a publicly traded company provided the Executive is
employed by Xxxxxx Healthcare on each such anniversary date.
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In the event there is a change in control in Xxxxxx Healthcare,
Executives's vesting will be accelerated so he is fully vested in the
Restricted Grant. For the purposes hereof, a "change in control" is
defined as a sale, transfer or other disposition of all or substantially
all of the assets of Xxxxxx Healthcare, at a time of which is it a
publicly traded corporation, or of Xxxxxx Communications, Inc. if Xxxxxx
Healthcare is not a publicly traded corporation, or the consummation of a
merger or consolidation of Xxxxxx Healthcare which results in the
stockholders of Xxxxxx Healthcare immediately prior to such transaction
owning, in aggregate, less than a majority of the surviving or resulting
entity.
The Restricted Stock Agreement shall also provide that Executive is
precluded from selling, hedging, pledging or otherwise transferring any
shares of restricted stock in any manner for a period of four years from
the date on which Xxxxxx Healthcare becomes a publicly traded company.
With respect to this restricted grant only, and so long as Executive
is actively employed by Employer, Employer agrees to annually lend to
Executive an amount necessary for Executive to pay all federal and state
income taxes required of Executive as a result of the periodic vesting of
such restricted stock. In the event Executive is terminated for any reason,
all outstanding principal and interest under such loans shall be
accelerated and become due and payable, and be repaid to Xxxxxx Healthcare
upon the later of 4 years and 30 days from the date on which Xxxxxx
Healthcare becomes a publicly traded company or 30 days after termination.
The specific terms of any loan will be set forth in a separate Loan
Agreement.
If the Employer terminates the employment of the Executive, other
than for cause, prior to the date on which Xxxxxx Healthcare becomes a
publicly traded company, then in lieu of the Restricted Stock otherwise
provided under 6(b), Executive will be issued $500,000 of vested
Unrestricted Stock in Xxxxxx Communications, Inc. If the employer
terminates the employment of the Executive, other than for cause, after the
date on which Xxxxxx Healthcare becomes a publicly traded company, then no
restrictions will be imposed upon the 20% portion of the Restricted Grant
that was vested at the time of the grant.
(c) Alternative Incentive Stock Arrangement
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In the event Xxxxxx Healthcare does not become a publicly traded
company by June 30, 2000, then in lieu of the benefits provided under 6(a)
and 6(b) Executive shall be granted stock in Xxxxxx Communications, Inc. in
equivalent amounts as set forth in paragraphs 6(a) and 6(b) above (i.e.,
$4,000,000 in Xxxxxx Communications, Inc. nonqualified stock options and
$2,500,000 in Xxxxxx Communications, Inc. restricted common stock), subject
to the same provisions as paragraphs 6(a) and 6(b) except that for purposes
of vesting, the grant date shall be the Effective Date.
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In the event that non-qualified stock options or restricted stock are granted
under this section 6(c)and that there is a subsequent change in control in
Xxxxxx Communications, Inc., Executive's vesting under this Alternative
Incentive Stock Arrangement will be accelerated and he will be fully vested in
these non-qualified stock options and restricted stock. For the purposes hereof,
a "change in control" is defined as a sale, transfer or other disposition of all
the assets of Xxxxxx Communications, Inc., or the consummation of a merger or
consolidation of Xxxxxx Communications, Inc. which results in the stockholders
of Xxxxxx Communications, Inc. immediately prior to such transaction owing, in
aggregate, less than a majority of the surviving or resulting entity.
(d) Stock Option Plan
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The above stock options shall be issued under a stock option plan to be
established by the Employer. The stock option agreement may contain such other
and further terms as are not inconsistent with this Agreement or the stock
option plan.
The Executive acknowledges and agrees that nothing in this Section 6 changes,
alters or modifies the "at will" status of his employment with the Employer.
7. Fringe Benefits
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(a) The Executive shall entitled to all benefits generally available to
executive employees of the Employer.
(b) The Executive shall be entitled to (3) weeks of vacation during
each year of employment. Such vacation shall be taken at such times as the
Executive and the President and Chief Operating Officer and/or its Board of
Directors of the Employer shall agree. The Executive shall be entitled to sick
leave and holidays in accordance with the policy of the Employer as to its
executive employees.
(c) Stock Loan. The Employer further agrees to lend Executive a total
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of $500,000, which loan proceeds are to be used exclusively for the purchase of
Xxxxxx Healthcare stock. The specific terms and conditions of the loan will be
set forth in a separate agreement executed by Employer and Executive at the time
of the loan. The terms of the loan will include: (1) that the loan will be
secured by the purchased stock; (2) that the loan must be repaid within thirty
days of the earlier of the sale of the stock or Executive's termination of
employment (regardless of the reason); (3) that it will be a nonrecourse loan;
(4) that the interest on the loan will be at an annual rate of 6%.
(d) Car allowance. Executive shall entitled to monthly car allowance
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$450, paid as taxable wages. The allowance will end effective with the
executive's termination.
8. Reimbursement of Business Expenses
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The Employer shall reimburse the Executive in accordance with Employer's
policies for all reasonable out-of-pocket costs incurred or paid by the
Executive in connection with or related to, the performance of his duties,
responsibilities or services under this Agreement, upon presentation by the
Executive of documentation, expense statements, vouchers, and/or such other
supporting information as the Employer may reasonably request.
9. Non-Solicitation and Non-Competition
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(a) Except as provided in paragraph (f) below, the Executive agrees
that while the Executive is employed pursuant to this Agreement and for a period
of twelve (12) months following termination of the Executive's employment by
the Employer for any reason (the "Non-Competition Period"), whether by action of
the Executive or the Employer, the Executive will not, except as otherwise
provided herein, engage or participate, directly or indirectly as principal,
agent, executive, employer, consultant, stockholder, partner or in any other
individual capacity whatsoever, in the conduct or management of, or own any
stock or any other equity investment in or debt of, any business which is
competitive with any business conducted by the Employer.
(b) For the purpose of this Agreement, a business shall be considered
to be competitive with the business of the Employer if such business is engaged
in providing outsourced marketing services or any other business in which the
Employer is engaged at the time of termination of the Executive's employment.
(c) During the Non-Competition Period, the Executive will not, for his
own benefit or for the benefit of any person or entity other than the Employer,
(i) solicit, or assist any person or entity other than the Employer to solicit
any officer, director, executive or employee of the Employer to leave his/her
employment, (ii) hire or cause to be hired for Executive's benefit any present
or former officer, director, executive or employee of the Employer, or (iii)
engage any present or former officer, director, executive or employee of the
Employer as a partner, contractor, sub-contractor, employee, consultant or other
business associate of the Executive.
(d) During the Non-Competition Period, the Executive will not (i)
solicit, or assist any person or entity other than the Employer to solicit, any
person or entity that is a client of the Employer, or has been a client of the
Employer during the twelve (12) months prior to the date of termination of the
Executive's employment, to purchase outsourced marketing services or any other
products or services the Employer provides to a client, or (ii) interfere with
any of Employer's business relationships.
(e) The Executive acknowledges that (i) the markets served by the
Employer are national in scope and are not dependent on the geographic location
of the executive personnel or the businesses by which they are employed, and
(ii) the above covenants are manifestly reasonable on their face, and the
parties expressly agree that such restrictions have been designed to be
reasonable and no greater than is required for the protection of the Employer.
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(f) Nothing in this Agreement shall be deemed to prohibit the Executive
from owning equity or debt investments in any corporation, partnership or other
entity which is competitive with the Employer, provided that such investments
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(i) are passive investments and constitute one percent (1%) or less of the
outstanding equity securities of such an equity the equity securities of which
are traded on a national securities exchange or other public market and (ii) are
approved by the Employer.
(g) The parties to this Agreement mutually agree that, in recognition
of Employer's dependence on Executive's experience to carry out its business
plan and Executive's senior and key position in the Employer, the restrictions
detailed in Section 9 of this Agreement are necessary and appropriate to give
effect to the intended relationships of the parties. Executive agrees that
because damages arising from violations of Section 9 of this Agreement are
extremely difficult to quantify with certainty, injuctive relief will be
necessary to affect the intent of such Section. Accordingly, Executive hereby
consents to the imposition of a preliminary or permanent injuction as a remedy
to this breach of Section 9 of this Agreement.
It is the desire and intent of the parties hereto that the restrictions set
forth in Section 9 of this Agreement shall be enforced and adhered to in every
particular, and in the event that any provision, clause or phrase shall be
declared by a court of competent jurisdiction to be judicially enforceable
either in whole or in part--whether the fault be in duration, geographic
coverage or scope of activities precluded--the parties agree that they will
mutually petition the court to sever or limit the unenforceable provisions so as
to retain and effectuate to the greatest extent legally permissible the intent
of the parties as expressed in this Section 9 of this Agreement.
10. Confidential Information
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(a) The Executive shall not (for his own benefit or the benefit of any
person or entity other than the Employer) use or disclose any of the Employer's
trade secrets or other confidential information. The term "trade secrets or
other confidential information" includes, by way of example, matters of
a technical nature, "know-how," computer programs (including documentation of
such programs), research projects, and matters of a business nature, such as
proprietary information about costs, profits, markets, sales, lists of
customers, and other information of similar nature to the extent not available
to the public, and plans for future development. After termination of this
Agreement, the Executive shall not use or disclose trade secrets or other
confidential information unless such information becomes a part of the public
domain other than through a breach of this Agreement or is disclosed to the
Executive by a third party who is entitled to receive and disclose such
information.
(b) Upon the effective date of notice of the Executive's or the
Employer's election to terminate this Agreement, or at any time upon the
request of the Employer, the Executive (or his heirs or personal
representatives) shall deliver to the Employer all documents and materials
containing either trade secrets and confidential information relating to the
Employer's business or privileged information, and all documents,
materials and other property belonging to the Employer, which in either case
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are in the possession or under the control of the Executive (or his heirs or
personal representatives).
(c) All discoveries and works made or conceived by the executive during
his employment by the Employer, jointly or with others, that relate to the
Employer's activities shall be owned by the Employer. The terms "discoveries and
works" include, by way of example, inventions, computer programs (including
documentation of such programs), technical improvements, processes, drawings,
and works of authorship, including sales materials which relate to wall media
products, sampling/comparing or services. The Executive shall promptly notify
and make full disclosure to, and execute and deliver any documents requested by,
the Employer to evidence or better assure title to such discoveries and works by
the Employer, assist the Employer in obtaining or maintaining for itself at its
own expense United States and foreign patents, copyrights, trade secret
protection and other protection of any and all such discoveries and works, and
promptly execute, whether during his employment or thereafter, all applications
or other endorsements necessary or appropriate to maintain patents and other
rights for the Employer and to protect its title thereto. Any discoveries and
works which, within six (6) months after the termination of the Executive's
employment by the Employer, are made, disclosed, reduced to a tangible or
written form or description, or are reduced to practice by the Executive and
which pertain to work performed by the Executive while with the Employer shall,
as between the Executive and the Employer, be presumed to have been made during
the Executive's employment by the Employer.
11. Enforcement
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The Executive agrees that the Employer's remedies at law for any breach or
threat of breach by him of the provisions of Sections 9 and 10 hereof will be
inadequate, and that the Employer shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of Sections 9 and 10 hereof
and to enforce specifically the terms and provisions thereof, in addition to any
other remedy to which the Employer may be entitled at law or equity.
12. Attorney's Fees and Costs
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Executive agrees that in the event the Employer institutes any action to
enforce and/or prosecute this agreement, the Employer shall be entitled to
recover from Executive its attorney's fees and costs related to instituting and
maintaining such action.
13. Advance Notice of Prospective Employment
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Executive agrees that following the termination of his employment, prior to
accepting employment with, or agreeing to perform services for, any entity that
competes with the Employer, he will notify the Employer in writing of
Executive's intentions so as to provide the Employer with the opportunity to
assess whether Executive's employment or retention may potentially violate any
provisions of this Agreement.
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14. Miscellaneous Provisions
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(a) Notices. All notices required or permitted under this Agreement
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shall be in writing and shall be deemed effective upon personal delivery or upon
deposit with the United States Postal Service, by registered or certified mail,
postage prepaid, addressed to the other party at the address set forth in the
Employer's records.
(b) Pronouns. Whenever the context may require, any pronouns used in
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this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the plural,
and vice versa.
(c) Entire Agreement. This Agreement constitutes the entire agreement
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between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement,
including, but not limited to, all prior agreements and understandings relating
to stock options or stock ownership in the Employer.
(d) Amendment. This Agreement may be amended or modified only by a
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written instrument executed by both the Employer and the Executive.
(e) Governing Law. This Agreement shall be construed, interpreted and
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enforced in accordance with the laws of the State of Maryland, without regard to
its conflict of law principles.
(f) Successors and Assigns. This Agreement shall be binding upon and
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inure to the benefit of both parties and their respective successors and
assigns; provided, however, that the obligations of the Executive are personal
and shall not be assigned or delegated by him.
(g) Waiver. No delays or omissions by the Employer or the Executive in
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exercising any right under this Agreement shall operate as a waiver of that or
any other right. A waiver or consent given by the Employer or the Executive on
any one occasion shall be effective only in that instance and shall not be
construed as a bar or waiver of any right on any other occasion.
(h) Captions. The captions appearing in this Agreement are for the
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convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
(i) Severability. In case any provision of this Agreement shall be held
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by a court with jurisdiction over the parties to this Agreement to be invalid,
illegal or otherwise unenforceable, the validity, legality and enforceability of
the remaining provisions shall in no way be affected or impaired thereby.
(j) Cooperation of the Parties. The Employer and the Executive agree to
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make all reasonable efforts to cooperate to insure compliance with this
Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the Day
and year first above written.
EMPLOYER EXECUTIVE
Xxxxxx Communications, Inc.
By: /s/ Xxxxxxx Xxxxxx /s/ Eran Broshay
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Eran Broshay
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