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EXHIBIT 10.10
EMPLOYMENT AGREEMENT
(Xxxxxxx X. Xxxxxxxxx)
THIS EMPLOYMENT AGREEMENT is hereby made as of September 1, 1996, by
and between XXXXXXX X. XXXXXXXXX, hereinafter referred to as the "Employee,"
and MLC HOLDINGS, INC., a Delaware corporation, whose principal place of
business is located at 00000 Xxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx
00000, hereinafter referred to as the "Employer."
RECITALS:
A. The Employer is engaged in the business of specialized asset
financing with a focus on the leasing of information technology equipment and
services.
B. The Employee has substantial experience in the business of the
Employer.
C. The Employer desires to secure the services of the Employee,
and the Employee is willing to be employed as Secretary and Treasurer of the
Employer and its subsidiaries, including without limitation MLC Group, Inc. and
MLC GATX, Inc. (hereinafter, collectively, the "Company"), on the terms,
covenants and conditions hereinafter set forth.
THEREFORE, in consideration of the mutual promises and agreements
hereinafter set out, the Employer and the Employee agree as follows:
1. Employment. The Employer hereby employs, engages, and hires
the Employee, and the Employee hereby accepts employment with the Employer as
Secretary and Treasurer, to render such services for the Employer as determined
by the Board of Directors of the Employer. The Employee accepts and agrees to
such hiring, engagement and employment, subject to the general supervision and
pursuant to the orders, advice and direction of the directors of the Employer.
2. Extent of Efforts; Other Employment. The Employee agrees that
the Employee shall devote his entire productive time and attention to the
business affairs of the Employer and, to the best of the Employee's ability,
experience and talents, shall perform all of the duties that may be required of
and from the Employee pursuant to the express and implicit terms hereof to the
reasonable satisfaction of the Employer. The Employee shall not engage in any
other employment duties or pursuits whatsoever, or directly or indirectly render
any services of a business, commercial, or professional nature to any person or
organization, whether for compensation or otherwise, without the prior written
consent of the Employer's Board of Directors. This paragraph 2 shall not
prohibit the making of passive, personal investments, nor the conduct to a
reasonable extent of private business affairs if those activities do not
interfere with the services required under this Agreement. [The Employer agrees
to waive the corporate opportunity doctrine for any endeavor that might be
brought to Employee except those which relate to the business of Employer.]
3. Term and Termination of Employment.
A. Term - Subject to the provisions of Section 3(B), the
"Term" of the Employee's employment shall be three (3) years, commencing on the
date of closing of the initial
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public offering by the Employer (the "Effective Date"), and shall renew
automatically for successive one (1) year periods unless a party hereto
provides written notice to terminate to the other party prior to thirty (30)
days before the end of the original period or any successive period.
B. Termination - This Agreement shall automatically
terminate upon the occurrence of any of the following events:
(i) The death of the Employee;
(ii) The "Permanent Disability" (hereinafter
defined) of the Employee; or
(iii) Written notice from the Board of Directors to
the Employee of his termination for "Cause" (hereinafter defined).
As used herein, "Permanent Disability" means any mental or physical
illness or disability continuing for a period of more than six (6) consecutive
months which renders the Employee unable to perform his duties and services
hereunder in a satisfactory manner. In the event of any disputes over the
existence or commencement of such disability, the issue shall be determined by
a qualified physician mutually agreed to by the Employer and the Employee , or,
if applicable, the Employee's legal representative. The determination of such
physician shall be conclusive and binding on the parties hereto.
As used herein, "Cause" means: gross neglect of duty, prolonged
absence from duty without the consent of the Employer, the acceptance by the
Employee of a position with another employer without consent, intentionally
engaging in any activity which is in conflict with or adverse to the business
or other interests of the Company, willful misconduct on the part of the
Employee, misfeasance or malfeasance of duty causing a violation of any law
which is reasonably determined to be detrimental to the Company, breach of a
fiduciary duty owed to the Company or any material breach of this Agreement by
the Employee which has not been corrected by the Employee within (30) days
after his receipt of notice of such breach from the Employer.
4. Compensation of the Employee. As the Employee's entire
compensation (exclusive of director's fees, if any) for all services rendered
to the Employer during the term of this Agreement, the Employee shall have and
receive, subject to withholding and other applicable employment taxes:
A. Commencing on the first day of the first month immediately
following the Effective Date (the "Salary Commencement Date"), a "basic salary"
at the rate of One Hundred Twenty Thousand and 00/100 Dollars ($120,000) per
annum, payable in cash or good check, not less frequently than monthly and not
later than the last day of the month in question; provided, however, that the
rate of such salary shall be reviewed by the Board of Directors of the Employer
not less often than annually and may be increased (but not decreased) at each
yearly renewal date. Prior to the
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Salary Commencement Date, the Employee shall continue to receive his basic
salary as in effect on the date of this Agreement.
B. Bonus compensation over and above the basic salary equal
to five percent (5%) of increase of the net income before taxes (as defined on
Exhibit A attached hereto) over net income before taxes for the preceding
fiscal year, but not to exceed Eighty Thousand and 00/100 Dollars ($80,000) for
any fiscal year, as more particularly determined by the formula set forth on
Exhibit A hereto and payable at such time or times as the Board of Directors in
its discretion may from time to time determine.
C. The right to receive an immediately exercisable grant of
an option to acquire 100,000 shares in accordance with that certain
Nonqualified Stock Option Agreement by and between the Employer and the
Employee, a copy of which is attached hereto as Exhibit B.
D. The right to receive or participate in any additional
"fringe" benefits, including but not limited to insurance programs and pension
or profit-sharing plans, which may from time to time be made available to
executives of the Employer.
5. Facilities and Expenses.
A. The Employer shall provide the Employee with a private
office, office equipment, supplies and other facilities and services consistent
with the current practices of the Employer, and suitable to the Employee's
position and adequate for the performance of his duties.
B. The Employee may be authorized from time to time to incur
reasonable expenses for promoting the business of the corporation, including
expenses for entertainment, travel, and similar items. The Employer will
reimburse the Employee for all such authorized expenses upon the presentation
by the Employee of an itemized account of such expenditures. The Employee
shall provide the Employee's own personal transportation, except for such times
as the Employee is using the Employer-owned vehicles for official business.
6. Reimbursement of Disallowed Expenses. If any salary payment,
medical reimbursement, employee fringe benefit, expense allowance payment, or
other expense incurred by the Employer for the benefit of the Employee is
disallowed, in whole or in part, as a deductible expense of the Employer for
federal income tax purposes, the Employee shall reimburse the Employer upon
notice and demand, to the full extent of the disallowance. This legally
enforceable obligation is in accordance with the provisions of Revenue Ruling
69-115 and is for the purpose of entitling the Employee to a business expense
deduction for the taxable year in which the repayment is made to the Employer.
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7. Vacation and Sick Leave.
A. The Employee shall accrue four (4) weeks vacation each
calendar year and may take such vacation at times to be determined in the
manner most convenient to the business of the Employer. In addition, the
Employee may take time off at such times as may be determined by the Board of
Directors to attend such meetings and postgraduate courses as may directly
benefit the Employer and the Employee. Unused days of vacation may not be
carried over to future years. In addition, the Employee may take as holidays
five (5) days of the Employee's choosing, so long as it is convenient to and
approved by the Employer.
B. The Employee shall accrue ___________ (__) days sick leave
in each calendar month, not to exceed a total of thirty (30) days. Unused days
of sick leave may not be carried over to future years. Any date used for the
purpose of determining the date of permanent or partial disability under this
Agreement shall be postponed until such time as all of the Employee's sick
leave shall be exhausted.
8. Illness or Incapacity. If the Employee becomes unable to
devote the Employee's full time to the business of the Employer because of
illness or incapacity during the term of this Agreement, then during such
period of illness or incapacity, the Employee's compensation shall be as
follows:
A. For the first six (6) months thereof--One Hundred percent
(100%) of the compensation provided for by paragraph 4 of this Agreement.
B. If the Employee shall not have resumed the Employee's
duties within the six (6) month period specified above, then the Employee's
compensation hereunder shall be terminated as of the end of the six (6) month
period, and the Employer shall have no further financial obligation to the
Employee.
9. Death During Employment. If the Employee dies during the term
of the Employee's employment, the Employer shall pay to the estate of the
Employee the basic salary which would otherwise be payable to the Employee up
to the end of the month in which the Employee's death occurs, not including any
bonuses. The Employer shall have no further financial obligations to the
Employee or to the Employee's estate under the terms of this Agreement.
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10. Registration Rights. If the Employer at any time proposes to
file a registration statement on Form S-3 or any successor thereto (or other
applicable SEC registration form available for registering restricted stock),
the Employer shall give written notice to Employee of its intention to do so.
Upon the written request of Employee, received by the Employer within 30 days
after the giving of any such notice by the Employer, to register any of
Employee's shares of Employer stock, the Employee will use its best efforts to
cause the stock as to which registration shall have been so requested to be
included in the securities to be covered by the registration statement proposed
to be filed by the Employer, all to the extent requisite to permit the sale or
other disposition by the Employee of such stock so registered.
11. Severability. All agreements and covenants contained herein
are severable, and in the event any of them shall be held to be invalid by any
competent court, this contract shall be interpreted as if such invalid
agreements or covenants were not contained herein.
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12. Notices. Any notice required or permitted to be given under
this Agreement shall be sufficient if in writing and sent by certified or
registered mail, return receipt requested, to the parties at the following
addresses:
TO THE EMPLOYER:
MLC Group, Inc.
00000 Xxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
TO THE EMPLOYEE:
Xxxxxxx X. Xxxxxxxxx
000 Xxxxxx Xxxx
Xxxxx Xxxxxx, XX 00000
13. Assignment. This Agreement is personal to each of the parties
hereto and neither may assign or delegate any of the party's rights or
obligations hereunder without first obtaining the written consent of the other
party.
14. Miscellaneous.
A. No amendments or additions to this Agreement shall be
binding unless in writing and signed by both parties hereto.
B. This Agreement shall be governed in all respects by the
laws of or applicable to the State of Delaware. The paragraph headings in this
Agreement are included solely for convenience and shall not affect or be used
in connection with the interpretation of this Agreement.
C. This contract contains the complete agreement concerning
the employment arrangement between the parties and shall, as of the
commencement of the term of employment hereunder, supersede all other
agreements between the parties. The parties stipulate that neither of them has
made any representation with respect to the subject matter of this Agreement or
any representations, including the execution and delivery hereof, except such
representations as are specifically set forth herein, and each of the parties
acknowledges that the party has relied on the party's own judgment in entering
into this Agreement.
D. The waiver by the Employer of a breach of any condition of
this Agreement by the Employee shall not be construed as a waiver of any
subsequent breach by the Employee.
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IN WITNESS WHEREOF, the parties have executed this Agreement as the
date first above written.
EMPLOYER:
MLC HOLDINGS, INC., a Delaware
corporation
By:
---------------------------------------
Xxxxxxx X. Xxxxxx, President
EMPLOYEE:
------------------------------------------
XXXXXXX X. XXXXXXXXX
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EXHIBIT A
Bonus Compensation Formula
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EXHIBIT B
Copy of Stock Option Agreement
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EXHIBIT B
TO
EXHIBIT 10.10
NONQUALIFIED STOCK OPTION AGREEMENT
(Xxxxxxx X. Xxxxxxxxx)
MLC Holdings, Inc. (the "Company"), in consideration of the value of
the continuing services of Xxxxxxx X. Xxxxxxxxx (hereinafter called
"Optionee"), which continuing services the grant of this option is designed to
secure, and in consideration of the undertakings made herein by Optionee,
hereby grants to Optionee an option (the "Option"), evidenced by this option
agreement ("Option Agreement"), exercisable for the period and upon the terms
hereinafter set out, to purchase one hundred thousand (100,000) shares of
common stock of the Company ("Common Stock") for a purchase price equal to Six
and 40/100 Dollars ($6.40) per share.
1. Term of Option. This Option is granted and dated on the date
set forth next above the signature shown (sometimes hereinafter called the
"Date of Grant") and will terminate and expire, to the extent not previously
exercised, ten (10) years after the Date of Grant, or at such earlier time as
may be specified in Section 4 hereof.
Except as otherwise provided in this Option Agreement, this Option is
exercisable as follows:
(a) 25,000 shares at any time on or after the
completion of the Offering and from time to time thereafter and prior to the
termination of the Option;
(b) 25,000 additional shares at any time and from time to
time after the expiration of one year from the Date of Grant and prior to the
termination of the Option;
(c) 25,000 additional shares at any time and from time to
time after the expiration of two years from the Date of Grant and prior to the
termination of the Option; and
(d) 25,000 additional shares at any time and from time to
time after the expiration of three years from the Date of Grant and prior to
the termination of the Option.
2. Non-Transferability. This Option is not assignable or
transferable otherwise than by will or by the laws of descent and distribution.
During the lifetime of the Optionee, this Option shall be exercisable only by
him.
3. Manner of Exercise. The Optionee (or other person entitled to
exercise the Option) shall purchase shares of Common Stock subject hereto by
the payment to the Company of the purchase price therefore in full. The Option
may be exercised from time to time in multiples of 100 shares by written notice
to the Company stating the full number of shares to be purchased and the time
of deliver thereof, which shall be at least 15 days after the giving of notice
unless an earlier date shall have been agreed upon between Optionee (or other
person entitled to exercise the Option) and the Company, accompanied by full
payment for the shares by certified check or the equivalent or otherwise
acceptable to the Company. At the time of delivery, the Company shall, without
transfer or issue tax to the Optionee (or other person entitled to exercise the
Option) deliver at the principal office of the Company, or at such other place
as shall be mutually agreed upon, a certificate or
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certificates for such shares; provided, however, that the time of delivery may
be postponed by the Company for such period as may be required for it to comply
with reasonable diligence with any requirements of law. If the Optionee (or
other person entitled to exercise the Option) fails to accept delivery of all
or any part of the number of shares specified in such notice upon tender of
delivery thereof, Optionee's payment shall be returned and the right to
exercise the Option with respect to such undelivered shares shall be thereupon
terminated.
4.01 The Option shall terminate and may no longer be
exercised if the Optionee ceases to be an employee of the Company, except that
(i) if the Optionee dies while in the employ of the Company, or within two (2)
months after the termination of such employment, or within six (6) months if
determined to be permanently disabled, the Option may be exercised on his
behalf as set forth below; and (ii) if the Optionee's employment shall have
been terminated for any reason other than his death, or permanent disability,
he may at any time within a period of two (2) months after such termination
exercise such Option to the extent that the Option was exercisable on the date
of the termination of his employment; provided, however, that in the case of
termination for cause by the Company of the employment of the Optionee, or if
an employee shall terminate his employment in violation of any employment
agreement with the Company, then the Option shall terminate and expire
concurrently with the termination of his employment and shall not thereafter be
exercisable to any extent. The definition of "cause" shall be as set forth in
paragraph 4.03 below for each Optionee.
4.02 If the Optionee dies during the term of the Option
while in the employ of the Company, or within the two (2) month period after
the termination of employment, or within six (6) months if determined to be
permanently disabled without having fully exercised the Option, the executor or
administrator of his estate or the person who inherits the right to exercise
the Option by bequest or inheritance shall have the right within twelve (12)
months after the Optionee's death to purchase the number of shares which the
deceased Optionee was entitled to purchase at the date of his death, after
which time the Option shall lapse.
4.03 The term "cause" as used herein shall mean gross
neglect of duty, prolonged absence from duty without the consent of the
Company, the acceptance by Optionee of a position with another employer without
consent, intentionally engaging in any activity which is in conflict with or
adverse to the business or other interests of the Company, willful misconduct
on the part of Optionee, misfeasance or malfeasance of duty causing a violation
of any law which is reasonably determined to be detrimental to the Company,
breach of a fiduciary duty owed to the Company or any material breach of an
employment contract which has not been corrected by Optionee within (30) days
after his receipt of notice of such breach from the Company.
5. Adjustments on Recapitalization. The number of shares of
Common Stock subject hereto and the option price per share shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of the Common Stock resulting from the subdivision or consolidation of
shares, or the payment of a stock dividend after the Date of Grant, or other
decrease or increase in the shares of Common Stock outstanding effected without
receipt of consideration by the Company; provided, however, that any option to
purchase fractional shares resulting from such adjustments shall be eliminated.
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6. Adjustments on Reorganization. If the Company shall at any
time merge or consolidate with or into another corporation, the holder of this
Option will thereafter receive, upon the exercise thereof, the securities
and/or property to which a holder of the number of shares of Common Stock then
deliverable upon the exercise of the Option would have been entitled upon such
merger or consolidation, and the Company shall take such steps in connection
with such merger or consolidation as may be necessary to assure that the
provisions of this Agreement shall thereafter be applicable, as nearly as
reasonably may be, in relation to any securities or property thereafter
deliverable upon the exercise of such option; provided, however, that under no
circumstances shall any option exercise date be accelerated in contemplation of
such action and the surviving entity following any such action shall at all
times be entitled, in its sole discretion, to tender options on such terms and
conditions as such surviving entity may deem appropriate. A sale of all or
substantially all of the assets of the Company for a consideration (apart from
the assumption of obligations) consisting primarily of securities shall be
deemed a merger or consolidation for the foregoing purposes.
IN WITNESS WHEREOF, this Option Agreement is executed as of the _____
day of September, 1996.
MLC HOLDINGS, INC.
By:
--------------------------
Xxxxxx X. Xxxxxx
Chief Executive Officder
The undersigned Optionee hereby accepts the benefits of the foregoing
Incentive Stock Option Agreement.
------------------------- ------------------------------
Date Xxxxxxx X. Xxxxxxxxx
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