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.
5.4
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.
6.5 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.
6.6
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.
| Vemics, Inc. | |||
|
Date
|
By:
|
||
| Xxxx Xxxxx | |||
| Chairman/CEO | |||
