Exhibit 10.12
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT is made effective as of the 1st day of April, 2004
(the "Effective Date").
AMONG:
HEINZ CORPORATION, a corporation formed pursuant to the laws of
the State of Missouri and having an office for business located
at 000 Xxxxxxx Xxxxx, Xx. Xxxxx, Xxxxxxxx 00000 ("Employer"), and
wholly owned subsidiary of WPCS INTERNATIONAL INCORPORATED, a
corporation formed pursuant to the laws of the State of Delaware
("Parent");
AND
XXXXX XXXXX, an individual having an address at 000 Xxxxxxx
Xxxxx, Xx. Xxxxx, Xxxxxxxx 00000 ("Employee")
WHEREAS, Employee, Parent and Employer are parties to that certain Agreement and
Plan of Merger, made as of April 1, 2004 (the "Merger Agreement"), pursuant to
which Employee has agreed to continue to serve as President of Employer, and
Employer has agreed to hire Employee as such, pursuant to the terms and
conditions of this Employment Agreement (the "Agreement").
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises
and the mutual covenants, agreements, representations and warranties contained
herein, the Merger Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Employee and Employer
hereby agree as follows:
ARTICLE 1
EMPLOYMENT
Employer hereby affirms, renews and extends the employment of Employee as
President, and Employee hereby affirms, renews and accepts such employment by
Employer for the "Term" (as defined in Article 3 below), upon the terms and
conditions set forth herein. In addition, the Employee shall also serve as
Executive Vice President of Parent during the Term, in charge of Employer, WPCS
Incorporated and Invisinet, Inc.
ARTICLE 2
DUTIES
During the Term, Employee shall serve Employer and Parent faithfully, diligently
and to the best of his ability, under the direction and supervision of the Board
of Directors of Employer and the Chief Executive Officer of Parent and shall use
his best efforts to promote the interests and goodwill of Employer, Parent and
any affiliates, successors, assigns, parent corporations, subsidiaries, and/or
future purchasers of Employer and Parent. Employee shall render such services
during the Term at Employer's principal place of business or at such other place
of business as may be determined by the Board of Directors of Employer, as
Employer may from time to time reasonably require of him, and shall devote all
of his business time to the performance thereof. Employee shall have those
duties and powers as generally pertain to each of the offices of which he holds,
as the case may be, subject to the control of the Board of Directors.
ARTICLE 3
TERM
The "Term" of this Agreement shall commence on the Effective Date and continue
thereafter for a term of three (3) years, as may be extended or earlier
terminated pursuant to the terms and conditions of this Agreement. The Term of
this Agreement shall automatically renew for successive one (1) year periods
unless, prior to the 30th calendar day preceding the expiration of the then
existing Term, either Employer or Employee provides written notice to the other
that it elects not to renew the Term. Upon delivery of such notice, this
Agreement shall continue until expiration of the Term, whereupon this Agreement
shall terminate and neither party shall have any further obligation thereafter
arising under this Agreement, except as explicitly set forth herein to the
contrary.
ARTICLE 4
COMPENSATION
Salary
4.1 Employer shall pay to Employee an annual salary (the "Salary") of One
Hundred Forty Thousand Dollars ($140,000.00), payable in equal installments at
the end of such regular payroll accounting periods as are established by
Employer, or in such other installments upon which the parties hereto shall
mutually agree, and in accordance with Employer's usual payroll procedures, but
no less frequently than monthly.
Benefits
4.2 During the Term, Employee shall be entitled to participate in all medical
and other employee benefit plans, including vacation, sick leave, retirement
accounts and other employee benefits provided by Employer to similarly situated
employees on terms and conditions no less favorable than those offered to such
employees. Such participation shall be subject to the terms of the applicable
plan documents, Employer's generally applicable policies, and the discretion of
the Board of Directors or any administrative or other committee provided for in,
or contemplated by, such plan.
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Expense Reimbursement
4.3 Employer shall reimburse Employee for reasonable and necessary expenses
incurred by him on behalf of Employer in the performance of his duties hereunder
during the Term, including, without limitation, reimbursement for cellular
telephone expenses in accordance with Employer's then customary policies,
provided that such expenses are adequately documented.
Automobile
4.4 Employee shall be entitled to the full-time use of an automobile owned or
leased by Employer. In addition, Employer shall reimburse Employee for all
maintenance and gasoline expenses associated with the automobile, provided that
such expenses are adequately documented.
Bonus
4.5 In addition to the Salary, Employee shall be entitled to receive an annual
bonus equal to 2.5% (the "Bonus") of quarterly operating income, before the
deduction of interest and income taxes of Employer, WPCS Incorporated and
Invisinet, Inc. The amount of the Bonus shall be determined based upon the
operating income reported in the financial statements of Employer and Parent, as
calculated based on U.S. generally accepted accounting principles. Employer
shall instruct its auditor to calculate the Bonus for each fiscal year or
portion thereof ending after the date of this Agreement (an "Auditor's Bonus
Report"), within 105 days after each fiscal year end. Employer shall provide a
copy of each Auditor's Bonus Report to Employee promptly upon receipt thereof.
Employee shall have the right to review and independently verify the conclusions
of any Auditor's Bonus Report by delivering notice in writing to Employer within
30 days after receipt of any such Auditor's Bonus Report indicating that
Employee wishes to exercise his right of review and verification. Within 10
business days after receipt of any such notice, Employer shall make available to
Employee and his representatives, at reasonable times during normal business
hours, the books and records of Employer which are reasonably necessary to
conduct such review and verification. Employee shall cause such review to be
conducted and concluded as quickly as reasonably practicable and in such a
manner so as not to unreasonably interfere with the business and operations of
Employer. Any representatives conducting such review shall, prior to being given
access to such books and records, be required to enter into confidentiality and
non-disclosure agreements with Employer on terms and conditions satisfactory to
Employer, acting reasonably. The costs of any such review shall be borne by
Employee unless the review indicates a discrepancy between the Bonus figure
contained in the Auditor's Bonus Report and the figure, if any, agreed to by
Employer and Employee following such review of greater than 10%. If Employee and
Employer shall be unable to resolve any dispute respecting any determination
contained in any Auditor's Bonus Report, then any disputed matters ("Disputed
Items") shall, within 20 days after notice is delivered by Employee to Employer
that there exist Disputed Items, be submitted to arbitration as set forth below.
Within five (5) business days of Employee's delivery of written acceptance
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of the Auditor's Bonus Report (as may have been amended or adjusted pursuant to
the foregoing procedures) to Employer, Employer shall pay Employee the Bonus in
a lump sum, subject to Employer's statutory and customary withholdings.
Arbitration
4.6 An independent chartered accountant chosen by Employer (hereinafter referred
to as "Employer's Accountant") and an independent chartered accountant chosen by
Employee (hereinafter referred to as "Employee's Accountant") shall together
within 20 days, appoint a representative from an accounting firm (other than
Employer's Accountant or Employee's Accountant) to arbitrate the dispute
(hereinafter referred to as the "Arbitrator"). The parties shall, within 20 days
after the appointment of the Arbitrator, present their position with respect to
the Disputed Items to the Arbitrator together with such other materials as the
Arbitrator deems appropriate. The Arbitrator shall within 20 days after the
submission of such evidence, submit its written decision on each Disputed Item
to the parties. Any determination by the Arbitrator with respect to any Disputed
Item shall be final and binding on such parties. The Arbitrator shall comply,
and the arbitration shall be conducted in accordance with, the Commercial
Arbitration Rules of American Arbitration Association then in force. If the
Arbitrator determines that the Auditor's Bonus Report was correct so that the
Bonus presented therein was equal to or greater than the actual Bonus, or less
than the actual Bonus by a less than 10% variance, the costs of any such
arbitration shall be borne by Employee. If the Arbitrator determines that the
Auditor's Bonus Report was incorrect so that the Bonus presented therein was
less than the actual Bonus by more than 10%, the costs of any such arbitration
shall be borne by Employer.
ARTICLE 5
OTHER EMPLOYMENT
During the Term of this Agreement, Employee shall devote substantially all of
his business and professional time and effort, attention, knowledge, and skill
to the management, supervision and direction of Employer's business and affairs
as Employee's highest professional priority. Except as provided below, Employer
shall be entitled to all benefits, profits or other issues arising from or
incidental to all work, services and advice performed or provided by Employee.
Nothing in this Agreement shall preclude Employee from devoting reasonable
periods required for:
(a) serving as a director or member of a committee of any organization or
corporation involving no conflict of interest with the interests of
Employer, provided that Employee must obtain the written consent of
Employer;
(b) serving as a consultant in his area of expertise (in areas other than
in connection with the business of Employer), to government,
industrial, and academic panels where it does not conflict with the
interests of Employer; and
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(c) managing his personal investments or engaging in any other
non-competing business;
provided that such activities do not materially interfere with the regular
performance of his duties and responsibilities under this Agreement.
ARTICLE 6
CONFIDENTIAL INFORMATION/INVENTIONS
Confidential Information
6.1 Employee shall not, in any manner, for any reasons, either directly or
indirectly, divulge or communicate to any person, firm or corporation, any
confidential information concerning any matters not generally known in the
wireless communications industry or otherwise made public by Employer which
affects or relates to Employer's business, finances, marketing and/or
operations, research, development, inventions, products, designs, plans,
procedures, or other data (collectively, "Confidential Information") except in
the ordinary course of business or as required by applicable law. Without regard
to whether any item of Confidential Information is deemed or considered
confidential, material, or important, the parties hereto stipulate that as
between them, to the extent such item is not generally known in the wireless
communications industry, such item is important, material, and confidential and
affects the successful conduct of Employer's business and goodwill, and that any
breach of the terms of this Section 6.1 shall be a material and incurable breach
of this Agreement. Confidential Information shall not include: (i) information
obtained or which became known to Employee other than through his employment by
Employer; (ii) information in the public domain at the time of the disclosure of
such information by Employee; (iii) information that Employee can document was
independently developed by Employee; and (iv) information that is disclosed by
Employee with the prior written consent of Parent.
Documents
6.2 Employee further agrees that all documents and materials furnished to
Employee by Employer and relating to the Employer's business or prospective
business are and shall remain the exclusive property of Employer. Employee shall
deliver all such documents and materials, uncopied, to Employer upon demand
therefore and in any event upon expiration or earlier termination of this
Agreement. Any payment of sums due and owing to Employee by Employer upon such
expiration or earlier termination shall be conditioned upon returning all such
documents and materials, and Employee expressly authorizes Employer to withhold
any payments due and owing pending return of such documents and materials.
Inventions
6.3 All ideas, inventions, and other developments or improvements conceived or
reduced to practice by Employee, alone or with others, during the Term of this
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Agreement, whether or not during working hours, that are within the scope of the
business of Employer or that relate to or result from any of Employer's work or
projects or the services provided by Employee to Employer pursuant to this
Agreement, shall be the exclusive property of Employer. Employee agrees to
assist Employer, at Employer's expense, to obtain patents and copyrights on any
such ideas, inventions, writings, and other developments, and agrees to execute
all documents necessary to obtain such patents and copyrights in the name of
Employer.
Disclosure
6.4 During the Term, Employee will promptly disclose to the Board of Directors
of Employer full information concerning any interest, direct or indirect, of
Employee (as owner, shareholder, partner, lender or other investor, director,
officer, employee, consultant or otherwise) or any member of his immediate
family in any business that is reasonably known to Employee to purchase or
otherwise obtain services or products from, or to sell or otherwise provide
services or products to, Employer or to any of its suppliers or customers.
ARTICLE 7
COVENANT NOT TO COMPETE
Except as expressly permitted in Article 5 above, during the Term of this
Agreement, Employee shall not engage in any of the following competitive
activities: (a) engaging directly or indirectly in any business or activity
substantially similar to any business or activity engaged in (or proposed to be
engaged in) by Employer; (b) engaging directly or indirectly in any business or
activity competitive with any business or activity engaged in (or proposed to be
engaged in) by Employer; (c) soliciting or taking away any employee, agent,
representative, contractor, supplier, vendor, customer, franchisee, lender or
investor of Employer, or attempting to so solicit or take away; (d) interfering
with any contractual or other relationship between Employer and any employee,
agent, representative, contractor, supplier, vendor, customer, franchisee,
lender or investor; or (e) using, for the benefit of any person or entity other
than Employer, any Confidential Information of Employer. The foregoing covenant
prohibiting competitive activities shall survive the termination of this
Agreement and shall extend, and shall remain enforceable against Employee, for
the period of two (2) years following the date this Agreement is terminated. In
addition, during the two-year period following such expiration or earlier
termination, neither Employee nor Employer shall make or permit the making of
any negative statement of any kind concerning Employer or its affiliates, or
their directors, officers or agents or Employee.
ARTICLE 8
SURVIVAL
Employee agrees that the provisions of Articles 6, 7 and 9 shall survive
expiration or earlier termination of this Agreement for any reasons, whether
voluntary or involuntary, with or without cause, and shall remain in full force
and effect thereafter.
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Notwithstanding the foregoing, if this Agreement is terminated upon the
dissolution of Parent or Employer, the filing of a petition in bankruptcy by
Parent or Employer or upon an assignment for the benefit of creditors of the
assets of Parent or Employer, Articles 6, 7 and 9 shall be of no further force
or effect.
ARTICLE 9
INJUNCTIVE RELIEF
Employee acknowledges and agrees that the covenants and obligations of Employee
set forth in Articles 6 and 7 with respect to non-competition, non-solicitation,
confidentiality and Employer's property relate to special, unique and
extraordinary matters and that a violation of any of the terms of such covenants
and obligations will cause Employer irreparable injury for which adequate
remedies are not available at law. Therefore, Employee agrees that Employer
shall be entitled to an injunction, restraining order or such other equitable
relief (without the requirement to post bond) as a court of competent
jurisdiction may deem necessary or appropriate to restrain Employee from
committing any violation of the covenants and obligations referred to in this
Article 9. These injunctive remedies are cumulative and in addition to any other
rights and remedies Employer may have at law or in equity.
ARTICLE 10
TERMINATION
Termination by Employee
10.1 Employee may terminate this Agreement for Good Reason at any time upon 30
days' written notice to Employer, provided the Good Reason has not been cured
within such period of time. Employee may terminate this Agreement at any time
for any reason upon 30 days' prior notice to Employer.
Good Reason
10.2 In this Agreement, "Good Reason" means, without Employee's prior written
consent, the occurrence of any of the following events, unless Employer shall
have fully cured all grounds for such termination within thirty (30) days after
Employee gives notice thereof:
(i) any reduction in his then-current Salary;
(ii) any material failure to timely grant, or timely honor, any equity or
long-term incentive award;
(iii) failure to pay or provide required compensation and benefits;
(iv) any failure to appoint, elect or reelect him to the position of
President of Employer; the removal of him from such position; or any
changes in the
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reporting structure so that Employee reports to someone other than the
board of directors of Employer in connection with such position;
(v) any material diminution in his title or duties or the assignment to
him of duties not customarily associated with Employee's position as
President of Employer;
(vi) any relocation of Employee's office as assigned to him by Employer, to
a location more than 25 miles from Employer's current office;
(vii)the failure of Employer to obtain the assumption in writing of its
obligation to perform the Employment Agreement by any successor to all
or substantially all of the assets of Employer or Parent or upon a
merger, consolidation, sale or similar transaction of Employer or
Parent; or
(viii) the voluntary or involuntary dissolution of Employer or Parent, the
filing of a petition in bankruptcy by Parent or Employer or upon an
assignment for the benefit of creditors of the assets of Parent or
Employer.
The written notice given hereunder by Employee to Employer shall specify in
reasonable detail the cause for termination, and such termination notice
shall not be effective until thirty (30) days after Employer's receipt of
such notice, during which time Employer shall have the right to respond to
Employee's notice and cure the breach or other event giving rise to the
termination.
Termination by Employer
10.3 Employer may terminate its employment of Employee under this Agreement for
cause at any time by written notice to Employee. For purposes of this Agreement,
the term "cause" for termination by Employer shall be (a) a conviction of or
plea of guilty or nolo contendere by Employee to a felony, or any crime
involving fraud or embezzlement; (b) the refusal by Employee to perform his
material duties and obligations hereunder; (c) Employee's willful and
intentional misconduct in the performance of his material duties and
obligations; or (d) if Employee or any member of his family makes any personal
profit arising out of or in connection with a transaction to which Employer is a
party or with which it is associated without making disclosure to and obtaining
the prior written consent of Parent. The written notice given hereunder by
Employer to Employee shall specify in reasonable detail the cause for
termination. For purposes of this Agreement, "family" shall mean Employee's
spouse and/or children. In the case of a termination for the causes described in
(a) and (d) above, such termination shall be effective upon receipt of the
written notice. In the case of the causes described in (b) and (c) above, such
termination notice shall not be effective until thirty (30) days after
Employee's receipt of such notice, during which time Employee shall have the
right to respond to Employer's notice and cure the breach or other event giving
rise to the termination.
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Severance
10.4 Upon a termination of this Agreement without Good Reason by Employee or
with cause by Employer, Employer shall pay to Employee all accrued and unpaid
compensation as of the date of such termination, subject to the provision of
Section 6.2. Upon a termination of this Agreement with Good Reason by Employee
or without cause by Employer, Employer shall pay to Employee all accrued and
unpaid compensation and expense reimbursement as of the date of such termination
and the "Severance Payment." The Severance Payment shall be payable in a lump
sum, subject to Employer's statutory and customary withholdings. If the
termination of Employee hereunder is by Employee with Good Reason, the Severance
Payment shall be paid by Employer within five (5) business days of the
expiration of any applicable cure period. If the termination of Employee
hereunder is by Employer without cause, the Severance Payment shall be paid by
Employer within five (5) business days of termination. The "Severance Payment"
shall equal the greater of: (a) the total amount of the Salary payable to
Employee under Section 4.1 of this Agreement from the date of such termination
until the end of the Term of this Agreement (prorated for any partial month), or
(b) the amount of twelve (12) months' Salary; notwithstanding the foregoing,
during any renewal term of this Agreement, the amount of the "Severance Payment"
payable to Employee hereunder shall equal six (6) months' Salary.
Termination Upon Death
10.5 If Employee dies during the Term of this Agreement, this Agreement shall
terminate, except that Employee's legal representatives shall be entitled to
receive any earned but unpaid compensation or expense reimbursement due
hereunder through the date of death.
Termination Upon Disability
10.6 If, during the Term of this Agreement, Employee suffers and continues to
suffer from a "Disability" (as defined below), then Employer may terminate this
Agreement by delivering to Employee thirty (30) calendar days' prior written
notice of termination based on such Disability, setting forth with specificity
the nature of such Disability and the determination of Disability by Employer.
For the purposes of this Agreement, "Disability" means Employee's inability,
with reasonable accommodation, to substantially perform Employee's duties,
services and obligations under this Agreement due to physical or mental illness
or other disability for a continuous, uninterrupted period of sixty (60)
calendar days or ninety (90) days during any twelve month period. Upon any such
termination for Disability, Employee shall be entitled to receive any earned but
unpaid compensation or expense reimbursement due hereunder through the date of
termination.
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ARTICLE 11
PERSONNEL POLICIES, CONDITIONS, AND BENEFITS
Except as otherwise provided herein, Employee's employment shall be subject to
the personnel policies and benefit plans which apply generally to Employer's
employees as the same may be interpreted, adopted, revised or deleted from time
to time, during the Term of this Agreement, by Parent in its sole discretion.
During the Term hereof, Employee shall be entitled to vacation during each year
of the Term at the rate of four (4) weeks per year. Within 30 days after the end
of each year of the Term, Employer shall elect to (a) carry over and allow
Employee the right to use any accrued and unused vacation of Employee, or (ii)
pay Employee for such vacation in a lump sum in accordance with its standard
payroll practices. Employee shall take such vacation at a time approved in
advance by the Board of Directors of Employer, which approval will not be
unreasonably withheld but will take into account the staffing requirements of
Employer and the need for the timely performance of Employee's responsibilities.
ARTICLE 12
BENEFICIARIES OF AGREEMENT
This Agreement shall inure to the benefit of Employer and any affiliates,
successors, assigns, parent corporations, subsidiaries, and/or purchasers of
Employer or Parent as they now or shall exist while this Agreement is in effect.
ARTICLE 13
GENERAL PROVISIONS
No Waiver
13.1 No failure by either party to declare a default based on any breach by the
other party of any obligation under this Agreement, nor failure of such party to
act quickly with regard thereto, shall be considered to be a waiver of any such
obligation, or of any future breach.
Modification
13.2 No waiver or modification of this Agreement or of any covenant, condition,
or limitation herein contained shall be valid unless in writing and duly
executed by the parties to be charged therewith.
Choice of Law/Jurisdiction
13.3 This Agreement shall be governed by and construed in accordance with the
laws of the State of Missouri, without regard to any conflict-of-laws
principles. Employer and Employee hereby consent to personal jurisdiction before
all courts in the State of
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Missouri, and hereby acknowledge and agree that Missouri is and shall be the
most proper forum to bring a complaint before a court of law.
Entire Agreement
13.4 This Agreement embodies the whole agreement between the parties hereto
regarding the subject matter hereof and there are no inducements, promises,
terms, conditions, or obligations made or entered into by Employer or Employee
other than contained herein.
Severability
13.5 All agreements and covenants contained herein are severable, and in the
event any of them, with the exception of those contained in Articles 1 and 4
hereof, shall be held to be invalid by any competent court, this Agreement shall
be interpreted as if such invalid agreements or covenants were not contained
herein.
Headings
13.6 The headings contained herein are for the convenience of reference and are
not to be used in interpreting this Agreement.
Independent Legal Advice
13.7 Employer has obtained legal advice concerning this Agreement and has
requested that Employee obtain independent legal advice with respect to same
before executing this Agreement. Employee, in executing this Agreement,
represents and warranties to Employer that he has been so advised to obtain
independent legal advice, and that prior to the execution of this Agreement he
has so obtained independent legal advice, or has, in his discretion, knowingly
and willingly elected not to do so.
No Assignment
13.8 Employee may not assign, pledge or encumber his interest in this Agreement
nor assign any of his rights or duties under this Agreement without the prior
written consent of Parent.
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IN WITNESS WHEREOF the parties have executed this Agreement effective as of
the day and year first above written.
HEINZ CORPORATION
By: /s/ Xxxxx Xxxxx
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/s/ Xxxxx Xxxxx
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XXXXX XXXXX
