EMPLOYMENT AGREEMENT
Exhibit
10.6
THIS AGREEMENT, made and
entered into as of August 1, 2008, by and between Porta Systems Corp., a
Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxxxx (the
"Executive").
WHEREAS, the Executive is
employed by the Company in a senior management position and the Company wishes
to continue to employ the Executive upon the terms and conditions set forth in
this Agreement; and
WHEREAS, the Executive is
willing to serve in the employ of the Company upon the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in
consideration of the foregoing and the mutual promises and agreements
hereinafter set forth, the Company and the Executive agree as
follows:
1.
EMPLOYMENT AND DUTIES.
(a) The
Company hereby employs the Executive pursuant to this Agreement to render
services to the Company during the Term (as defined in Section 2 hereof) as the
Senior Vice President, Treasurer and Secretary of the Company or in such other
executive capacity as may be designated by the Chief Executive Officer or a
Board Member designated by the Company’s Board of Directors from time to time.
In performing such duties, the Executive shall be subject to the direction of
the Chief Executive Officer or such Board Member designated by the Company’s
Board of Directors from time to time. The Executive hereby accepts such employment and agrees
to devote his time, attention and best efforts exclusively to performing the
duties described above.
(b) The
Executive agrees to perform such duties as may be assigned or delegated to him
by the Chief Executive Officer or Board Member designated by the Company’s Board
of Directors and to be bound by the policies of the Company and its Affiliates
as in effect from time to time. The Executive further agrees to accept election,
and to serve, during all or part of a Term, as an employee, officer or director
of an "Affiliate" as defined in section (6) (f) hereof if assigned or elected to
such position by the Board of Directors of the Company or by the board of
directors or similar governing body of any Affiliate, and to perform such
services for any such Affiliate as may be assigned, without additional
compensation therefore other than that specified in this Agreement.
2.
TERM. The Company shall employ
the Executive pursuant to this Agreement for a period commencing on the date
hereof and ending on July 31, 2009, which period shall automatically be extended
for an additional twelve-month period effective August 1 of each year after the
date hereof while the Agreement remains in effect unless the Company shall have
given notice to the Executive, at least 90 days prior to such August 1, that it
has elected to terminate this Agreement at the expiration date of this
Agreement, subject to the earlier termination at any time during the Executive’s
period of employment, as hereinafter provided (the “Term”).
3.
COMPENSATION.
(a) The
Company shall pay the Executive an annual salary for the services to be rendered
by him from the date hereof at an annual rate to be reviewed by the Board of
Directors of the Company ("Board") at least annually, but which amount shall in
no event be fixed at an amount less than the Executive’s annual salary rate last
fixed by the Board, payable in periodic installments in accordance with the
Company’s regular payroll practices as in effect from time to time
("Salary"). Currently, Executive’s base salary has been set by the
Board at $100,000 per annum.
(b) The
Executive shall be entitled to participate in and receive the benefits under any
pension plans, bonus arrangements, health, life, accident and disability
insurance plans or programs and any other employee benefit or fringe benefit
plans, perquisites or arrangements which the Company makes available generally
to other employees of the Company to the extent that the Executive is otherwise
eligible to participate in such plans or arrangements pursuant to the provisions
of such plans or arrangements as they may be in effect from time to
time.
(c) During
the period of his employment hereunder, the Executive shall be entitled to three
(3) weeks paid non-cumulative vacation each year or such greater period of
vacation consistent with the Company’s policy with respect to vacation in effect
from time to time.
4.
TERMINATION OF EMPLOYMENT.
(a) The
Executive’s employment hereunder shall terminate automatically as of the date of
his death or upon the Executive’s termination due to disability determined by
the Company's long-term disability carrier at that time. In the event of
termination for death or long-term disability, the Company shall pay to the
Executive’s estate or beneficiary or to the Executive, in full satisfaction of
its liabilities hereunder, a payment equal to three months’ salary.
(b) The
Company may at any time at its option, exercised by not less than 10 days’
written notice to the Executive (or pay in lieu thereof), terminate his
employment for “Cause" (as hereinafter defined). In the event of termination for
Cause, the Company shall have no further obligations or liabilities to the
Executive hereunder. For purposes of this Agreement, the term Cause means any
conviction (or plea of nolo contendere) of the Executive of a felony or
misdemeanor (other than for motor vehicle or similar minor offenses) under the laws of the United
States of any state thereof; any material breach by the Executive of this
Agreement or any material failure of the Executive to perform his duties
hereunder; intentional dishonesty or gross negligence by the Executive in the
performance of his duties hereunder; the failure by the Executive to comply with
any policies of the Company or any Affiliate for which he renders services; or
conduct on the part of the Executive which damages the reputation of the
Company, which achieves general notoriety with respect to conduct or alleged
conduct by the Executive which is scandalous, immoral or illegal or which is
disruptive of the business and its Affiliates.
(c) The
Company may at any time at its option, exercised by not less than 10 days’
written notice to the Executive (or pay in lieu thereof), terminate his
Employment prior to the expiration of the Term other than for Cause, provided
that, if the Company so terminates the Executive’s employment other than for
Cause, the Executive shall be entitled to continue to receive, as severance,
payment of Salary at the most recent annual rate in effect prior to the date of
such termination, the greater (i) the remaining amount due under this Agreement
through the next succeeding July 31 following the termination date (maximum of
12 months) or (ii) for a period of six (6) months following the date of such
termination of employment provided further that the amount of severance payable
under this Section 4(c) shall continue to be paid in the event of the
Executive’s death after termination of his Employment. If the annual bonus
payable to the Executive has already been determined by the Company at the time
his employment is terminated other than for Cause, the Executive shall receive a
bonus payment in such amount following his termination of employment. In all
other circumstances, no bonus shall be payable to the Executive under this
Section 4(c) following his termination of employment. The Company shall continue
to pay insurance premiums for the same medical and dental health care benefits
to which the Executive was entitled prior to such termination for the period of
time permitted under the relevant policy but no longer than the period of such
salary continuance, provided that the Company’s medical and dental health
carrier or carriers are willing to continue to provide such coverage upon the
payment of such premium or premiums. The failure of the Company to
renew or extend this Agreement shall not entitle the Executive to the severance
provided in this Section 4(c).
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(d) The
parties agree that the severance amount payable to the Executive pursuant to
Section 4(c) shall constitute liquidated damages in the event of termination of
this Agreement by the Company other than for Cause. The parties agree that the
damages payable to the Executive in the event of such termination would be
difficult to estimate accurately, the severance amount bears a reasonable
relationship to the amount of damages anticipated by the parties as of the date
hereof and the severance amount is not a penalty. In reliance on the validity of
this liquidated damages provision, the Company has waived any obligation of the
Executive to mitigate damages by seeking other employment and the severance
amount shall not be reduced by compensation earned in such other
employment.
(e) In
the event of the Executive’s termination of employment other than for Cause, the
Company shall have no further obligations or liabilities to the Executive
hereunder, other than to make such severance payments as provided in Section
4(c), to provide such medical and dental benefits as provided in Section 4(c)
and to receive benefits under stock plans, life insurance arrangements and
supplemental retirement arrangements in accordance with the terms of agreements
with the Executive on these matters. Upon payment of the amounts provided in
Section 4(c), the Company shall have no further liability of any kind or nature
whatsoever to the Executive under law or this Agreement relating to his
employment. The payment to the Executive under Section 4(c) shall be in lieu of
and in discharge of any obligations of the Company to the Executive for Salary,
bonus, or under any separation or severance pay plan or for other compensation
or expectation or remuneration or benefit in connection with the Executive’s
employment or the termination thereof. In consideration for the payments
hereunder, the Executive hereby irrevocably and unconditionally releases and
discharges the Company and each of the Company’s successors, shareholders,
Affiliates, directors, officers, employees, representatives, agents, assigns,
attorneys, divisions (and agents, directors, officers, employees,
representatives and attorneys of such successors, shareholders, Affiliates and
divisions) and all persons acting by, through or under or in concert with any of
them from any and all charges, complaints, claims, liabilities, obligations,
controversies, damages, causes of action, costs and expenses of any nature
whatsoever, at law or at equity, whether known or unknown, arising now or in the
future, including but not limited to rights under any federal, state or local
laws respecting the terms and conditions of employment, in connection with the
Executive’s employment by the Company and the termination thereof under this
Agreement.
(f) The
Executive agrees that he will provide at least six (6) months’ written notice of
his intent to terminate this Agreement prior to the expiration of the initial or
any extended term. The Executive agrees that, without the prior written consent
of the Company, he will not take any action, solicit any proposals, or engage in
discussions or negotiations that could be expected to result in a breach of his
agreement in this Section 4(f).
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5.
COVENANTS.
(a) In
view of the fact that the Company is engaged in specialized businesses, which
businesses are conducted throughout the world, and the information, research and
marketing data developed by the Company are confidential, the Executive agrees
that, during the Term and for a period equal to the period during which payments
are made pursuant to Section 4(c) hereof, he will not directly or indirectly
engage in the business substantially conducted by the Company or any Affiliate
at the date of such termination and for which the Executive performed material
services during the period of his employment, either for himself or for any
other person, employer, business or other entity in competition with the Company
or such Affiliate, engage in any such business on his own account, or become
interested in any such business, directly or indirectly, as an individual,
partner, shareholder, officer, director, principal, agent, employee, trustee,
consultant or in any other relationship or capacity provided, however, that
nothing contained herein shall be deemed to prohibit the Executive from
acquiring solely as an investment up to two (2) percent of the issue and
outstanding shares of capital stock of any public corporation engaged in any
such competitive business. During the Term and for a period equal to the period
during which the Executive receives payments pursuant to Section 4(c) hereof,
the Executive and any entity controlled by him or by which he is employed shall
not solicit, interfere with, induce any person who is or was an officer,
interfere with, hire, offer to hire or induce any person who is or was an
officer, employee, customer, supplier or agent of the Company or any Affiliate
to discontinue his or her relationship with the Company or such Affiliate or to
accept employment by any other entity or person.
(b) The
Executive agrees to keep secret and retain in the strictest confidence all
confidential matters which relate to the Company or any Affiliate, including,
without limitation, customer lists, trade secrets, pricing policies and other
business affairs of the Company and any Affiliate learned by him from the
Company or any Affiliate or otherwise heretofore or hereafter, and not to
disclose any such confidential matter to anyone outside the Company or any
Affiliate, whether during or after his period of service with the Company,
except in the course of performing his duties hereunder. Upon request by the
Company, the Executive agrees to deliver promptly to the Company upon
termination of his services for the Company, or at any time thereafter as the
Company may request, all Company memoranda, notes, records, reports, manuals,
drawings, designs, computer files in any media and other documents (and all
copies thereof) relating to the Company’s or any Affiliate’s business and all
property of the Company or any Affiliate associated therewith, which he may then
possess or have under his control.
(c) The
Executive agrees that all processes, technologies and inventions, including new
contributions, improvements, formats, packages, programs, systems, machines,
compositions of matter manufactured, developments, applications and discoveries
which are related in any manner to the business (commercial or experimental) of
the Company or any of its Affiliates (collectively, “New Developments”), whether
patentable or not, conceived, developed, invented or made by him or jointly with
others during the period of his employment with the Company and the Company
shall be the sole owner of all the products and proceeds of the Executive’s
services, including intellectual or literary property in any form. The Executive
shall further: promptly disclose such New Developments to the Company; assign to
the Company, without additional compensation, all patent or other rights to such
New Developments for the United States and foreign countries; sign all papers
necessary to carry out the foregoing; and give a reasonable amount of testimony
in support of his inventorship.
(d) If
the Executive commits a material breach of any of the provisions of this Section
5 or Section 4(f), the Company or any Affiliate shall have the right and remedy
to have the provisions of this Agreement specifically enforced by any court of
competent jurisdiction, it being acknowledged by the Executive and agreed that
any such breach will cause irreparable injury to the Company or such Affiliate
and that money damages will not provide an adequate remedy to the Company or
such Affiliate. Such rights and remedies shall be in addition to, and not in
lieu of, any other rights and remedies available to the Company or any Affiliate
at law or in equity. The provisions of this Section 5 shall survive the
expiration or termination of this Agreement.
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6. MISCELLANEOUS.
(a)
Neither of the parties hereto shall have the right to assign this Agreement or
any rights or obligations hereunder without the prior written consent of the
other party; provided, however, that this Agreement shall inure to the benefit
of and be binding upon the successors and assigns of the Company upon any sale
of all or substantially all of the Company’s assets, or upon any merger or
consolidation of the Company with or into any other corporation, all as though
such successors and assigns of the Company and their respective successors and
assigns were the Company.
(b) The
Agreement and the relationships of the parties in connection with the subject
matter of this Agreement shall be construed and enforced according to the laws
of the State of New York without giving effect to the conflict of laws rules
thereof.
(c) This
Agreement contains the full and complete agreement of the parties relating to
the employment of the Executive hereunder and supersedes all prior agreements,
arrangements or understandings, whether written or oral, relating thereto. This
Agreement may not be amended, modified or supplemented, and no provision or
requirement hereof may be waived, except by written instrument signed by the
party to be charged. Notwithstanding the foregoing, in the event the Executive
is covered by the Executive Continuation Agreement between the Company and the
Executive which provides benefits payable upon the termination of the
Executive’s employment following a change in control of the Company, the
provisions of this Agreement which provide severance payments shall not be
applicable if the Executive becomes entitled to receive payments under such
Executive Continuation Agreement.
(d) If
any provision of this Agreement is held to be invalid or unenforceable by any
judgment of a tribunal of competent jurisdiction, the remainder of this
Agreement shall not be affected by such judgment, and this Agreement shall be
carried out as nearly as possible according to its original terms and
intent.
(e) Any
dispute or question arising from this Agreement or its interpretation shall be
settled exclusively by arbitration in New York, New York in accordance with the
commercial rules then in effect of the American Arbitration Association.
Judgment upon an award rendered by the arbitrator(s) may be entered in any court
of competent jurisdiction, including courts in the state of New York. Any award
so rendered shall be final and binding upon the parties hereto. All costs and
expenses of the arbitrator(s) shall be paid as determined by such arbitrator(s),
and all costs and expenses of experts, witnesses and other persons retained by
the parties shall be borne by them respectively. In the event that injunctive
relief shall become necessary under this Agreement, either of the parties shall
have the right to seek provisional remedies prior to an ultimate resolution by
arbitration.
(f) As
used herein, the term “Affiliate” shall mean any corporation or business entity
controlling, controlled by or under common control with the
Company.
(g) Any
notice required or permitted to be given under this Agreement shall be
sufficient if it is in writing, and if it is sent by registered mail to his
residence, in the case of the Executive, and to the Chief Executive Officer of
the Company at its principal executive offices, in the case of the Company, or
such other person or address as either party shall designate in writing to the
other. Notice has been deemed to be given three days after mailing.
IN WITNESS WHEREOF, the
parties have executed and delivered this Agreement as of the date first above
written.
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By:
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/s/ Xxxxxx X. Xxxxxxxx
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Xxxxxx
X. Xxxxxxxx
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Chief
Executive Officer
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/s/ Xxxxxxx Xxxxxxxx
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Xxxxxxx
Xxxxxxxx
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