EXHIBIT 10(w)
EMPLOYMENT AGREEMENT
This Agreement is entered into, to be effective as of April 1, 2000, by
and between Warrantech International, Inc., a Delaware corporation, with its
principal place of business located at 000 Xxxxxxxx Xxx, Xxxxxx, Xxxxx 00000
("Employer"), and Xxxx Xxxxxxxxx, an individual residing at 0000 Xxxxxxxxx
Xxxxx, Xxxxxxxxxxx, Xxxxx 00000 ("Executive").
RECITALS
WHEREAS, Employer recognizes that Executive will be a key member of
management and important to the long term development and prospects of Employer;
and
WHEREAS, Employer desires to employ Executive and Executive desires to be
employed by Employer pursuant to the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the forgoing and the terms and
conditions set forth herein, Employer and Executive hereby agree as follows:
I. Employment and Duties
Employer hereby employs Executive, and Executive hereby accepts such
employment, upon the terms and conditions set forth in this Agreement. Executive
shall render such executive, managerial, supervisory, developmental, marketing,
or other services as Employer may specify from time to time, subject at all
times to the direction and control of the Chief Executive Officer, Employer's
Board of Directors or any designee of either thereof. Executive shall serve as
and with the title of Executive Vice President of Warrantech Corporation and
President of Employer.
II. Term
The term of Executive's employment under this Agreement shall commence on
April 1, 2000 and shall continue through March 31, 2004.
III. Compensation
3.1 Salary. Employer shall pay Executive a base salary equal to One
Hundred Fifty Thousand Dollars ($150,000) and shall increase to a base salary
equal to One Hundred Seventy Five Thousand Dollars ($175,000.) per annum
effective June 28, 2000. Effective as of April 1, 2003, Executive's base salary
shall increase by 5% and shall automatically increase by 5% annually thereafter
during the remaining term of this Agreement. Such base compensation shall be
payable in accordance with Employer's payroll practices as in effect from time
to time.
3.2 Incentive Compensation. Executive will be entitled to receive a
fiscal-year incentive bonus equal to $50,000 ("Bonus"). Fifty percent (50%) of
said Bonus for each fiscal year during the term hereof will be based on
Warrantech Corporation's attainment of its financial-objectives (net income
before taxes) for such fiscal year, as stated in the budget and approved by the
Chief Executive Officer. The remaining fifty percent (50%) of the Bonus for each
fiscal year during the term hereof will be based on Employer's attainment of its
financial-objectives (net income before taxes) for such fiscal year, as stated
in the budget and approved by the Chief Executive Officer. Executive will be
deemed to have earned and will be entitled to receive the Bonus, if any, on or
about the seventy fifth (75th) day after the close of the corresponding fiscal
year, provided that Executive remains employed by Employer throughout the
complete fiscal year.
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3.3 Loan Repayment. Effective March 31, 2001, Warrantech Corporation shall
discharge Executives existing indebtedness thereto in the principal amount of
Fifteen Thousand Dollars ($15,000.) provided that Executive remains employed by
Employer as of said date.
3.4 Medical Insurance. Employer shall obtain and maintain in full force
and effect, a comprehensive major medical, hospitalization group plan (or the
equivalent) with dental coverage for the benefit of the Executive and his
qualified dependents. The medical and dental premiums will be fully paid for the
Executive and his qualified dependents.
3.5 Life Insurance. Employer, for the benefit of Employee, shall maintain
in full force and effect a split dollar life insurance policy with a premium
payment up to Ten Thousand Dollars ($10,000).
3.6 Other Compensation. In addition to the compensation heretofore set
forth, or as may be hereinafter provided, Employer shall provide Executive
during his employment any and all benefits commensurate with his position, which
Employer, in its sole and absolute discretion, may make available to its
Executive officers (or Executives in general, if any one is not available solely
for executive officers) under any general pension plan, or other Executive
benefit plan which may be in effect at any time or from time to time during the
employment period.
3.7 Automobile. It is contemplated that to perform the services required
by this Agreement, Executive shall obtain and remain fully responsible for the
maintenance and repair of an automobile, for which Employer shall provide
Executive with an expense allowance in the amount of Six Thousand Dollars
($6,000) per annum.
3.8 Expenses. Employer shall reimburse Executive in accordance with
Employer's expense reimbursement policies for all reasonable and necessary
expenses including, without limitation, travel and entertainment expenses,
incurred by Executive in connection with the business of Employer. Expenses
relating to membership in and attendance at trade and business associations and
conventions shall be reimbursed subject to the prior approval of Employer. All
such reimbursement shall be paid upon presentation of expense statements or
vouchers or such other supporting information as Employer may reasonably
require.
IV. Extent of Service
Executive shall devote his full time, attention, energies and skill to the
business of Employer, as directed by Employer, and shall assume and perform such
responsibilities and duties as may be assigned to him from time to time by the
Chief Executive Officer, Employer's Board of Directors or any designee of either
thereof. Executive shall be required to travel to such locations as may be
directed by Employer in the course of Executive's duties hereunder.
V. Termination
Notwithstanding any contrary provisions herein contained, the employment
of Executive pursuant to this Agreement may be terminated before the expiration
of the term as specified in the following provisions of this Article V, but such
termination shall not affect the obligations of Executive set forth in Article
VII hereof.
5.1 Death. Executive's employment hereunder shall be terminated
immediately in the event of his death.
5.2 By Employer, For Cause. Employer shall have the right to immediately
terminate Executive's employment under this Agreement for cause. Cause includes,
but is not limited to the following:
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(a) Misappropriating any funds or property of Employer;
(b) Attempting to obtain personal profit from any transaction in which
Employer has an interest;
(c) The material failure, material neglect or material refusal to (i)
perform the duties assigned to Executive under or pursuant to this Agreement or
(ii) abide by the other covenants, terms and conditions of this Agreement; or
(d) Activities by Executive of a public nature failing to conform to the
community standard of generally accepted personal or business conduct that such
activities may reasonably be expected to reflect badly upon the public image of
Employer or its business.
5.3 By Employer and Executive, Without Cause. This Agreement may be
terminated by Employer or Executive prior to the expiration of the term hereof
upon not less than sixty (60) days prior written notice. Notwithstanding the
forgoing, however, in the event that Executive gives notice of his intent to
terminate this Agreement Employer may elect, in its sole discretion, to
terminate this Agreement and Executive's employment hereunder at any time after
receipt of notice from Executive. In the event of a termination by Employer
pursuant to this Section 5.3, Executive shall be entitled to receive a severance
payment equal in amount to twenty-five percent (25%) of Executive's annual
salary as of the date of termination.
5.4 Effect of Termination. In the case of termination pursuant to this
Article V, the salary and other compensation specified in Section III, unless
otherwise specified, shall immediately terminate and cease to accrue. Executive
shall not be entitled to any stock options unless they have fully vested and no
credit will be given for partial years of employment to ascertain the amount of
options, which are fully vested.
VI. Inventions
6.1 Definitions. As used herein "Inventions" shall mean all discoveries,
inventions, improvements, and ideas relating to any process, formula, program or
software, machine, device, manufacture, composition of matter, plan or design,
whether patentable or not, and specifically includes, but is not limited to, all
designs and developments, of whatsoever nature, relating to computer hardware,
software or programs.
6.2 Rights to Inventions. Executive shall, during the period of his
employment with Employer, make prompt and full disclosure of all Inventions
which Executive makes or conceives, individually, jointly, or with any other
Executive, or Employer or Warrantech affiliate, during the period of Executive's
employment by Employer. All such inventions shall become Employer's exclusive
property.
Notwithstanding the foregoing, Executive shall retain all his rights in,
and shall not be required to assign to the Employer any invention (hereinafter
an "Excluded Invention"): (a) which was developed entirely on Executive's own
time, and (b) which does not relate directly to or have any application to the
business of Employer or any Warrantech affiliate or to their actual or
demonstrably anticipated research or development, or which does not result from
any work performed by Executive for Employer. This paragraph constitutes written
notification to the Executive of the inventions which Executive is not required
to assign to Employer. Executive shall advise employer of any invention made or
conceived by Executive which Executive believes he is entitled to pursuant to
this paragraph.
6.3 Records. Executive will keep and maintain complete written records of
all Inventions made or conceived by Executive, and of all work on investigations
done or carried out by Executive for Employer at all stages thereof, which
records shall be the property of Employer, except for records of the Excluded
Inventions. Upon termination of his employment with Employer, Executive agrees
to deliver promptly to
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Employer any unpublished memoranda, notes, records, reports, sketches, plans,
programs, software, or other documents held by him concerning any Inventions or
potential Inventions to which Employer would be entitled pursuant to the
provisions hereof, including any information, knowledge or data relating
thereto, or pertaining to the Employer's business or contemplated business,
whether confidential or not.
6.4 Assignments. During Executive's employment hereunder and after the
termination thereof, Executive shall execute, acknowledge, and deliver to
Employer all such papers, including applications for or assignments of patents
or copyrights or applications for the same, as may be necessary to enable
Employer, its nominees, successors or assigns, at its or their expense, to
publish, protect by litigation or otherwise, obtain titled and/or copyrights or
patents to the Inventions which are the property of Employer pursuant to this
Agreement, in any and all countries.
VII. Confidentiality and Non-Compete
7.1 Non-Competition Covenant. Executives agrees that, during the period of
Executive's employment by Employer and during the one year period immediately
following Executive's employment by Employer or any Warrantech subsidiary or
affiliate in any capacity, he will not, directly or indirectly, own, manage,
operate, control, consult with or for, be employed by or an agent for,
participate in or be connected in any manner with the ownership, management,
operation or control of any business that is competitive with the business of
Employer or any of its subsidiaries or affiliates. Further, Executive
acknowledges that, as the Executive Vice President and President of Warrantech
International, his services are unique and extraordinary, and that the
restrictions herein are reasonable for Employer's protection of its legitimate
business interests.
If any court or arbitrator having jurisdiction determines that the
foregoing non-compete covenant is invalid due to its duration, coverage or
extent, the covenant shall be modified to reduce its duration, coverage or
extent as necessary to make such covenant valid, and the covenant as modified
then shall be enforced.
Notwithstanding anything to the contrary set forth above, however,
Employer and Executive hereby agree that this Section 7.1 shall be of no further
force and effect in the event that Warrantech Corporation is subject to a change
of control as the result of a sale, merger, tender offer or any other reason
whatsoever whether or not consummated in a single transaction or in a series of
related transactions.
7.2 Confidentiality and Trade Secrets. During and after the terms of his
employment by Employer, Executive shall not communicate, divulge, or use any
secret, confidential information, trade secret or confidential customer list of
Employer or Warrantech affiliate, to, or on behalf of any person or entity,
except as consented to in writing by Employer. This obligation shall apply with
respect to any such item until such item ceases (other than through the action
of Executive) to be secret or confidential. Executive shall have no obligation
hereunder to keep confidential any Confidential Information to the extent
disclosure of any thereof is required by law or determined in good faith by
counsel to Executive to be necessary or appropriate to comply with any legal or
regulatory order, regulation or requirement; provided, however, that in the
event disclosure is required by law, Executive shall provide Employer with
prompt notice of such requirement so that Employer may seek an appropriate
protective order.
7.3 Remedies. In the event of any actual breach by either of the parties
of the provisions of this Section VII, then each shall be entitled to all the
remedies available by law or in equity, including without limitation the right
to obtain damages for said breach and non-adherence and the right to enjoin the
other, or any other person or entity in or threatening breach or non-adherence,
from continuing, and to remedy, the activities which constitute said breach. The
parties acknowledge and agree that any remedies at law may be inadequate in the
event of any breach of the provisions of this Section VII, and, therefore they
agree and acknowledge that each shall be entitled to all equitable remedies
which are appropriate in the event of such breach.
VIII. Miscellaneous.
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8.1 Entire Agreement. This Agreement contains the entire agreement among
the parties, superseding in all respects any and all prior oral or written
agreements or understandings pertaining to the subject matter hereof and
transactions contemplated hereby, and shall be amended or modified only by
written instrument signed by all of the parties hereto.
8.2 Waiver. No waiver by any party of any condition, or of the breach of
any term, covenant, representation or warranty contained in this Agreement ,
whether by conduct or otherwise, in any one or more instances shall be deemed to
be or construed as a further and continuing waiver of any such condition or
breach of any other term, covenant, representation, or warranty of this
Agreement, or the agreements or documents executed in connection herewith.
8.3 Right of Offset. If at any time Employer is obligated to make payments
to Executive under this Agreement whether as compensation, reimbursement of
expenses or otherwise, Employer shall have the right to offset against said
obligation any amount which Executive is obligated to pay to Employer or any
corporation controlling, controlled by or under common control with the Employer
at the time of offset. In the event that the amount which Employer seeks to
offset is in dispute or otherwise unliquidated, Employer may nevertheless
exercise its right of offset, but if it is ultimately determined that Employer
was not entitled to such offset, Employer shall, in addition to the amount not
properly offset, pay Executive interest on such amount from the date of offset
to the date of payment at 6% per annum. In the event that it is necessary for
Executive to take any action, whether at law or in equity, to recover amounts
which employer inappropriately withheld under this provision, then the
prevailing party shall be entitled to reasonable attorney's fees, costs and
other necessary disbursements in addition to any other relief to which it may be
entitled.
8.4 Binding Effect; Assignment. This Agreement shall be binding upon, and
shall inure to the benefit of and be enforceable by, the parties hereto and
their respective heirs, successors, and assigns, but this Agreement shall not be
assignable by Executive. In the event of (i) the merger or consolidation of
Employer with or into any other entity, (ii) the acquisition of Employer by any
entity, or (iii) the sale or other disposition by Employer of all or
substantially all of its businesses and/or assets, this Agreement shall remain
legally valid and binding and shall be enforceable by Executive against the
surviving entity.
8.5 General. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
one and the same instrument. The section headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement. This Agreement shall be governed, enforced and
construed under the laws of the State of Connecticut.
8.6 Resolution of Disputes. In the event of a dispute or disagreement
between the parties arising out of or in connection with this agreement, prior
to submission of the controversy to arbitration, the parties shall submit the
matter to mediation in a proceeding to be conducted in Stamford, Connecticut. If
the parties exhaust the mediation process without a successful resolution of the
matter, the dispute shall be settled in the State of Connecticut by arbitration
before a panel of three arbitrators, one selected by Employer and one selected
by Executive, with a third being appointed by the two so chosen. The arbitration
shall be commenced by the initiating party notifying the other party of its
demand for arbitration and of the arbitrator whom it selected and demanding that
the other party select its arbitrator. If the third arbitrator is not selected
within 30 days after the demand is served, he shall be selected in accordance
with the rules and regulations then in effect of this American Arbitration
Association or its successor. In any action, whether at law, in equity, or in
arbitration, to enforce or interpret the terms of, or otherwise arising out of
this Agreement, the prevailing party shall be entitled to reasonable attorney's
fees, arbitrator fees, costs and necessary disbursements in addition to any
other relief to which it may be entitled.
8.7 Representation and Indemnity. Executive represents and warrants to
Employer that he has the full right and power to enter into this Agreement and
that he is not bound by any restriction or impediment thereto. Executive
represents and warrants that he is not subject to any covenant not to compete or
any other restriction with any former employer or other entity which would
inhibit or restrict Executive's ability to perform any tasks requested by
Employer. Executive hereby indemnifies Employer against any
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claims, losses, damages or expenses that Employer may incur or suffer in
connection with any inaccuracy in, or breach of, any of the representations
and/or warranties set forth in this Section 8.7.
8.8 Survivability. Notwithstanding anything herein to the contrary.
Sections 6.4, 7.1, 7.2, 7.3, 8.3, 8.6, and 8.7 above shall survive the
termination of this Agreement and shall be deemed fully enforceable thereafter.
IN WITNESS WHEREOF, the parties have duly executed this Agreement to be
effective as of April 1, 2000.
WARRANTECH INTERNATIONAL EXECUTIVE
By: /s/ Xxxx San Xxxxxxx /s/ Xxxx Xxxxxxxxx
------------------------------------ -----------------------------------
Title: Chief Executive Officer Xxxx Xxxxxxxxx
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Date: January 9, 2002
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