EMPLOYMENT AGREEMENT
Exhibit 10.5
This
Employment Agreement (this "Agreement"), is entered into on October 1, 2004,
between VEMICS, Inc. ("VEMICS") and Xxxx Xxxxx ("Employee").
In
consideration of the mutual covenants contained herein, and for other good
and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Employment;
Duties.
VEMICS
hereby employs Employee as the Chief Executive Officer and Chairman of the
Board
of Directors of VEMICS. The employee shall function with full authority to
establish policy, set corporate direction and manage VEMICS's strategic
direction, investor relations, vendor relations, strategic alliances, operations
and strategic planning. Employee agrees to perform and discharge such duties
and
responsibilities as are prescribed from time-to-time by the VEMICS Board
of
Directors and as are appropriate for video conference/distance learning
executives of corporations with the financial, personnel and other resources
that are similar to that of VEMICS. The Employee shall devote all of his
business time, attention, and energy to the Company and shall not, during
the
term of his employment, be actively engaged in any managerial or employment
capacity in any other business activity for gain, profit, or other pecuniary
advantage; provided that the foregoing does not prohibit the Employee from
making investments that do not unreasonably interfere with the performance
of
his duties with the Company.
2. Compensation
and Withholding.
For
his
services pursuant to this Agreement, VEMICS will pay Employee an interim
salary
at the annual rate of $86,400. VEMICS will pay the Salary semimonthly (as
calculated by dividing the gross salary by 26 equal payments) and may withhold
from the Salary, the Benefits and any other compensation provided to Employee
hereunder, all Federal, state and local income, employment and other taxes,
as
and in such amounts as may be required to be withheld under applicable
law.
Employee's
salary will immediately be increased to $155,000 ("Salary") for the first
year
either upon improved financial condition or full funding or of the VEMICS
business plan (minimum of $3,000,000 in equity or debt financing or sales).
Partial funding will result in proportionate salary increases to be determined
by the compensation committee or through approval of the "Use of Proceeds"
report submitted to investors.
In
the
second year of this contract, following either improved financial condition
or
full funding of the business plan, Employee's salary shall be increased to
$190,000 annually. The Salary may be increased and cash or stock bonuses
may be
awarded from time-to-time to Employee as the Board determines at its sole
discretion. .
3. Employment
Term.
The
term
of this Agreement will commence on the date of this agreement or Employee's
first date of employment, whichever is later, and, unless sooner terminated
as
provided in Section 5, will end on December 31, 2007.
4. Benefits
and Incentive Payments.
4.1 VEMICS
will approve the grant to Employee of an option to purchase shares of
the
Company's common stock, in accordance with the terms of the Company's stock
option plan, as the same
may
be amended from time to time, and a nonqualified stock option agreement to
be
entered into
by the
Employee and the Company. This option expires when Employee's employment
terminates for cause or without cause or when Employee resigns, or upon
Employee's death.
4.2
Employee
will be entitled to a noncumulative paid vacation of three (3) weeks,
plus
the
week between Christmas and New
Year's
Day for each full year of the term hereof, each of which weeks may be taken
separately or together, and sick days in accordance with VEMICS's policy,
during
which Employee will be entitled to the full compensation and Benefits (as
defined in Section 4.3) otherwise payable hereunder; provided, however, any
allotted vacation time which has not been used in any particular year of
the
term hereof shall not be carried over to the next ensuing year without the
express written consent of the Employer.
4.3
Employee
may participate, on the same basis and subject to the same
qualifications
as other personnel of VEMICS, or as offered to key executives of the company,
in
any pension, profit sharing, life insurance, health insurance, hospitalization,
dental, drug prescription, short and long term disability,
accidental death or dismemberment and other benefit plans and policies VEMICS
provides with
respect
to its personnel generally (collectively, the "Benefits"). In addition, VEMICS
shall provide a xxxxxxx'x compensation and disability coverage equal to full
salary in the event that the employee becomes permanently disabled while
employed at VEMICS while engaged in performing his duties, or not,
during work time or on personal time. In the event that the company shall
fail
to provide this coverage
and
employee becomes disabled VEMICS shall fulfill its obligation from corporate
funds for the rest of employees life or for an equal duration that would
be
covered by an executive level similar insurance policy intended to provide
an
income for the employee and/or his family if employee becomes disabled and
can
not perform his regular duties.
4.4 VEMICS
will pay or promptly reimburse Employee, in accordance with
VEMICS's
normal policies and procedures for its personnel, for all allowances and
expenses provided for hereunder and for all reasonable out-of-pocket business,
entertainment and travel expenses incurred by Employee in the performance
of his
duties hereunder. Upon full funding or sufficiently improved financial
condition, VEMICS will provide employee with a monthly auto allowance of
$800
which will cover all direct auto expense of auto payments (if any) gas, oil,
and
insurance.
| 4.5 |
A
guaranteed minimum year end bonus of $25,000 will also be paid to
|
employee
on or before December 15' of each year following the first full year of funding,
providing the cash flow of the company warrants such payments. In the event
that
a cash payment can not be executed due to the cash flow situation at the
time,
as determined by the compensation committee, bonus money can accrue or be
taken
in stock options at the current best rate available.
5. Termination
of Employment and Severance Benefits.
5.1
Termination
by VEMICS of Employee with cause.
VEMICS
Board of
Directors
may terminate Employee's employment with VEMICS, with Cause. Termination
with
Cause shall be effective immediately. For purposes of this section "Cause"
shall
be
defined as: (i)
gross
misfeasance, gross malfeasance or gross nonfeasance by the Employee with
respect
to his
duties
hereunder; (ii) conviction
of the
Employee of a criminal
offense,
other than a traffic
offense;
or (iii)
performance by the Employee of any act of moral turpitude,
fraud or
gross dishonesty, with respect
to the performance
by the
Employee
of
his
duties hereunder.
Employee terminated by VEMICS for cause, as defined herein, shall only be
entitled to receive, except as otherwise required by law, salary, benefits
and
reimbursements (provided for in Section 4.3), that accrued
prior to the effective date of the termination. In addition, VEMICS shall
pay
salary and benefits
of
employee for an additional one hundred eighty (180) days from the effective
date
of termination herein. Nothing in this Section shall create any implication
that
VEMICS is waiving any remedy VEMICS
may have for breach by the Employee of this Agreement. The amount of salary
and
benefits shall
be
the same as existed at the time of termination by Company. The Company shall
be
required to
give
employee thirty (30) days written notice prior to termination with cause
as
defined herein.
| 5.2 |
Termination
be VEMICS of Employee without cause;
If
VEMICS's Board
|
or
its
designee terminates Employee's employment hereunder for any reason other
than
Cause as defined under section 5.1, or Employee's death or Permanent Disability
(as defined in Section 5.5), then (a) the Employee
shall be entitled to receive (i) the salary and benefits accrued prior to
the
Termination Date, and
(ii)
payment or reimbursement of any expenses, provided for under Section 4.3,
that
were incurred
by
Employee prior to the Termination Date, and (b) after the Termination Date.
VEMICS will also continue to pay the full salary and benefits (salary to
be paid
in equal semimonthly payments) to Employee
for a period of time of eighteen (18) months from the date employment is
terminated by the Board
of
Directors without cause. The amount of salary and benefits shall be the same
as
existed at the time
of
termination by Company. The Company shall be required to give employee ninety
(90) days
written
notice prior to termination without cause.
5.3 Employee's
Resignation from VEMICS without Cause. If
Employee
voluntarily
resigns his
employment with VEMICS, without Cause, then employee shall be entitled to
salary, benefits and reimbursements
(provided for in Section 4.3), that accrued prior to the effective date of
the
termination. In
addition, VEMICS shall pay employee
salary and benefits for an additional thirty (30) days from the
effective date of termination. The amount of salary and benefits shall be
the
same as existed at the time of termination by Employee. The Employee shall
be
required to give VEMICS sixty (60) days written notice prior to termination
without cause.
| 5.3 |
Employees
Resignation from VEMICS with Cause. If
Employee resigns
|
from
VEMICS with
Cause,
as defined herein, then (a) Employee shall be entitled to receive (i) the
salary
and benefits accrued
prior to the termination Date and (ii) payment or reimbursement of any expenses,
provided for
under
Section 4.3, that were incurred by Employee prior to the termination date
and
(b) after the termination date. The amount of salary and benefits shall be
the
same as existed at the time of termination
by Employee. VEMICS will also continue to pay the full salary and benefits
of
Employee
(salary
to paid in equal semimonthly payments) to Employee for a period of time of
eighteen (18) months from the date Employee resigns from VEMICS with Cause.
For
purposes of this section "Cause"
shall be defined as (i) a breach by VEMICS of any of its material agreements
contained herein
and the
continuation of such breach for ten business days after written notice thereof
is given to VEMICS
(ii) The creation of a hostile work environment such that employee is unable
to
perform his responsibilities
and duties as set forth under this agreement as well as the continuation
of a
hostile work
environment for ten business days after written notice thereof is given to
VEMICS. The Employee
shall be
required to give VEMICS thirty (30) days written notice prior to termination
with cause as defined herein.
5.5
Compensation
Upon Death or Permanent Disability.
If
Employee dies or
suffers
a
Permanent Disability, then VEMICS will () pay Employee or his estate,
six
months
Salary and bonus as described in section 5.2, according to the regular payroll
and (ii) continue for Employee's spouse and dependent children (if Employee
has
died) and for Employee and his spouse and dependent children
(if Employee suffers a Permanent Disability), all of the Benefits that Employee
was receiving at
the time
of his death or Permanent Disability, for 18 months after Employee's death
or
permanent disability. This clause is in addition to the disability key man
insurance policy clause in section 4.2. "Permanent Disability' means the
inability of Employee to perform his duties hereunder as a result of
any
physical or mental incapacity for 60 consecutive days or 90 days during any
twelve month period,
as
determined by the Board. The amount of Salary and Benefits shall be the same
as
existed at the time of termination by Company.
6.
Covenant
Regarding Confidentiality.
6.1.
Employee
acknowledges that he will have access to, and knowledge of,
VEMICS
Confidential Information, and that improper use or disclosure of VEMICS
Confidential Information by Employee,
whether during or after the termination of his employment by VEMICS, could
cause
serious
injury
to the business of VEMICS. Accordingly, Employee agrees that he will forever
keep secret and inviolate
all VEMICS Confidential Information which has or shall come into his possession,
and that he will
not
use the same for his own private benefit or directly or indirectly for the
benefit of others, and that
he will
not discuss VEMICS Confidential Information with any other person or
organization, all for so long as VEMICS Confidential Information is not
generally known by, or accessible to, the public.
| 6.2 |
Definition
of Confidential Information:
'VEMICS Confidential Information"
|
as
used
in this Agreement shall mean any and all technical and non-technical information
including patent, copyright, trade secret, and proprietary information,
techniques, sketches, drawings, models, inventions, know-how, processes,
apparatus, equipment, algorithms, software programs, software source documents,
and formulae related to the current, future, and proposed products and services
of VEMICS, and includes,
without limitation, VEMICS information concerning research, experimental
work,
development, design
details and specifications, engineering, financial information, procurement
requirements, purchasing,
manufacturing, customer lists, business forecasts, sales and merchandising,
and
marketing
plans
and information. "Confidential Information" shall also include proprietary
or
confidential information of any third party that may disclose such information
to employee in the course of their employment to VEMICS.
| 6.3 |
The
Employee further agrees that he will, immediately after termination
of his
|
employment
with the Company, and in no event later than 24 hours after termination,
return
to the Company all books, records, customer and pricing lists, correspondences,
contracts or orders, advertising or promotion
material, and other written, typed or printed materials, whether furnished
by
the Company or prepared
by the Employee, which contain any information relating to the Company's
business, and the
Employee
agrees that he will neither make nor retain any copies of such
materials.
6.4
Nondisclosure
and Nonuse obligation:
Employee
hereby agrees that he will not
make
use
of, disseminate, or in any way disclose any Confidential Information of the
VEMICS to any other party to
any
person, firm, or business, except to the extent necessary for the performance
of
his duties as an
employee
of VEMICS and any other purpose that VEMICS may hereafter authorize in writing.
Employee hereby agrees that it shall treat all Confidential Information of
the
VEMICS with due care to protect its Confidentiality.
| 6.4 |
Exclusions
from Nondisclosure and Nonuse obligations:
VEMICS and
|
Employee's
obligations under this section with respect to any portion of the VEMICS
Confidential Information shall terminate under this section when Employee
can
document that:
i. It
was in
the public domain at or subsequent to the time it was
communicated
to Employee by VEMICS through no fault of Employee;
ii. It
was
rightfully in Employee's possession free of any obligation of
confidence
at or subsequent to the time it was communicated to Employee by VEMICS;
or
A
disclosure of Confidential Information:
a)
in
response to a valid order by a court or other governmental body;
b)
otherwise required by law, or necessary to establish the rights of either
party
under this Agreement, shall not be considered to be a breach of this Agreement
or a waiver of confidentiality for other purposes; provided, however, that
Recipient shall provide prompt written notice thereof to enable Discloser
to
seek a protective order or otherwise prevent such disclosure.
| 6.5 |
Enforceability
of this Confidentiality Provision:
A
breath of any of the
|
promises
contained in this section will result in irreparable and continuing damage
to
VEMICS for which there will be no adequate remedy at law, Employee agrees
that
VEMICS shall be entitled to injunctive relief and/or a decree for specific
performance, and such other relief as
may
Court
may deem proper and just. (including monetary damages if
appropriate).
7. Arbitration.
Any
dispute or controversy arising under or in connection with this Agreement
or in
any manner associated with Employee's employment shall be settled exclusively
by
arbitration in New York, in accordance with the Rules of the American
Arbitration Association then in effect, except for the terms under Section
6.6.
The parties agree to execute and be bound by the mutual agreement to arbitrate
claims relating to Employee's employment, attached hereto as Attachment
A.
8. General.
8.1
This
Agreement will be construed, interpreted and governed by the laws of the
State
of
New York, without regard to the conflicts of law rules thereof.
| 8.2 |
The
provisions set forth in Sections 6 ,7 and 8 of this employment agreement
|
shall
remain in full force and effect even in the event this agreement is terminated,
for whatever reason, by Employee or VEMICS. All reference to VEMICS in Sections
6 ,7 and 8 include VEMICS's subsidiaries and other affiliates, if
any.
8.3
This
Agreement will extend to and be binding upon Employee, his legal
representatives,
heirs
and
distributees, and upon VEMICS, its successors and assigns regardless of any
change in the business
structure of VEMICS, be it through spin-offs merger, sale of stock, sale
of
assets or any other transaction.
However, this Agreement is a personal services contract and, as such, Employee
may not
assign
any of his duties or obligations hereunder.
8.4
In
the
event that VEMICS shall be sold or the current organizational structure
is
altered or changed by a change in ownership then the stock vesting shall
be
accelerated to the end of the current employment year plus twelve months
and be
transferred to the employee's estate.
8.5
In
the
event of a future disposition of the properties and businesses of the
Company
by merger,
acquisition, consolidation, sale of assets or otherwise, then the Company
may
elect to assign
this
Agreement and all of its rights and obligations hereunder to the acquiring
or
surviving person or entity;
provided that such corporation, person
or
entity shall assume in-writing all of the obligations of
the
Company hereunder; or in addition to the Company's other rights of termination,
to terminate this Agreement upon at least five days' written notice by paying
Employee the compensation owed him in accordance with Section 5.3 (Termination
Without Cause) of this Agreement.
8.6
This
Agreement constitutes the entire agreement of the parties with respect to
the
subject
matter hereof. No waiver, modification or change of any of the provisions
of
this Agreement will be
valid
unless in writing and signed by both parties. Any and all prior agreements
between the parties
written
or oral relating to Employee's employment by VEMICS are of no further force
or
effect.
8.7
The
waiver of any breach of any duty, term or condition of this Agreement
shall
not
be deemed to constitute a waiver of any preceding or succeeding breach of
the
same or any other duty, term
or
condition of this Agreement. No waiver of any provision of this Agreement
shall
be valid unless in
writing and signed by both the Employee and an authorized officer of the
Company. If any provision
of this
Agreement is unenforceable in any jurisdiction in accordance with its terms,
the
provision shall be
enforceable to the fullest extent permitted in that jurisdiction and shall
continue to be enforceable in
accordance with its terms in any other jurisdiction.
8.8
All
notices pursuant to this Agreement shall be in writing and delivered
personally
receipt acknowledged
(which shall include Federal Express, Express Mail or similar service) or
sent
by certified mail,
return receipt requested, addressed to the parties hereto and shall be deemed
given upon receipt, if
delivered personally, and three days after mailing, if mailed, unless received
earlier. Notices shall be addressed
and sent to VEMICS at its principal executive office and to executive at
this
home address
as it
appears in VEMICS's personnel records.
8.9
The
parties agree that, in the event of any breach or violation of this
Agreement,
such breach of violation will result in immediate and irreparable injury
and
harm to,
the
innocent party, who shall be entitled to the remedies of injunction and specific
performance or either of such remedies, if available, as well as all other
legal
or equitable remedies, if available, plus reasonable attorneys fees and costs
incurred in obtaining any such relief.
8.9A
The
Section headings contained in this Agreement are for convenience of
reference
only and shall not be used in construing this Agreement.
8.9B
This
Agreement may be executed in counterparts, each of which will be
deemed
an
original but all of which will together constitute one and the same agreement.
IN
WITNESS HEREOF, the parties have executed this Agreement as of the date first
above written.
By:___________________________
Xxxx
Xxxxx
Title: Chairman/CEO
G:\159\7-26-07
Docs\Employment Agreement - Xxxxx.doc
