EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of March __, 1998, by and between
XXXXXX ELECTRONICS, INC., a New York corporation with its principal offices
located at 000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 (the "Company"), and
XXXXXXXX X. XXXX, residing at 00 Xxxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxx Xxxx 00000
(the "Executive").
W I T N E S S E T H :
WHEREAS, the Company is engaged in the retail, sale, service and
custom installation of high quality audio, video and home theater equipment.
WHEREAS, Executive is presently employed by the Company as the
President of the Company.
WHEREAS, the Company wishes to assure itself of the continued
services of the Executive for the period provided in this Agreement, and the
Executive is willing to continue to serve in the employ of the Company, as the
President of the Company, on a full-time basis for said period, and upon the
other terms and conditions hereinafter provided.
NOW, THEREFORE, the Company and the Executive, intending to be
legally bound, agree as follows:
1. Employment. The Company shall continue to employ the
Executive, and the Executive agrees to continue his employment with the Company,
as President of the Company in accordance with the terms and conditions hereof
for a term of two years ("Term") commencing on the date the Securities and
Exchange Commission (the "Commission") declares a registration statement filed
by the Company on Form SB-2 (Registration No. 333-42121) to register certain
securities of the Company effective.
2. Duties.
2.1 During the Term, Executive, as the President of the
Company, shall continue to perform such duties and have such powers comparable
to such duties and powers Executive performed and exercised immediately prior
to this Agreement.
2.2 During the Term, Executive shall devote his full
business time, attention and energy to the business and affairs of the Company
and shall not engage, directly or
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indirectly, in any other business, employment or occupation which is
competitive with the business of the Company.
3. Compensation.
3.1 As full compensation for his services and undertakings
pursuant to the terms of this Agreement, Executive shall receive a base salary
at ________________________ ($________) Dollars per year (the "Base
Compensation"). The Base Compensation shall be payable at such regular times
and intervals as the Company customarily pays its employees from time to time.
The Executive shall be entitled to receive such salary increases and bonuses
as the Board of Directors of the Company may deem appropriate. If elected or
re-elected as a director of the Company, Executive agrees to serve in such
capacity without additional compensation.
3.2 Executive shall have the right to participate, on the
same basis as other executive officers of the Company, in the Company's
employee benefit programs, if any, including, without limitation, group life,
health, accident and hospitalization insurance programs covering the Executive
and his dependents and disability insurance similar in coverage to that
currently provided.
3.3 During the Term, Executive shall continue to be entitled
to benefits Executive enjoyed immediately prior to the commencement of this
Agreement.
3.4 The Company shall deduct from the Executive's Base
Compensation and bonus, if any, any federal, state or city withholding taxes,
social security contributions and any other amounts which may be required to
be deducted or withheld by the Company pursuant to any federal, state or city
laws, rules or regulations.
3.5 The Company shall reimburse the Executive, or cause him
to be reimbursed, for all reasonable out-of-pocket expenses incurred by him in
the performance of his duties hereunder or in furtherance of the business
and/or interests of the Company; provided, however, that the Executive shall
have previously furnished to the Company an itemized account, satisfactory to
the Company, in substantiation of such expenditures.
4. Indemnification. The Company undertakes, to the extent
permitted by law, to indemnify and hold the Executive harmless from and against
all claims, damages, losses and expenses, including reasonable attorneys' fees
and disbursements, arising out of the performance
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by the Executive of his duties pursuant to this Agreement, in furtherance of
the Company's business and within the scope of his employment.
5. Termination.
5.1 If the Executive dies or becomes disabled during the
Term, or if Executive voluntarily terminates his employment with the Company,
his Base Compensation and all other rights under this Agreement shall
terminate at the end of the month during which death or disability or
voluntary termination occurs. For purposes of this Agreement, the Executive
shall be deemed to be "disabled" if he has been unable to perform his duties
for six (6) consecutive months or for an aggregate amount of time equal to
nine (9) months in any twelve (12) month period, all as conclusively
determined in good faith by the board of directors of the Company.
5.2 The Company shall have the right to terminate the
employment of Executive for cause as set forth in Article 5.3, or without
cause. In the event Executive's employment with the Company is terminated
without cause, Executive shall be entitled, and agrees, to receive only the
compensation from the Company as set forth in the severance agreement between
the Company and Executive ("Severance Agreement") dated April 3, 1997
applicable to termination other than for cause.
5.3 The Company shall have the right to terminate the
employment of Executive under this Agreement in the manner described in the
last paragraph of Article 5.4 and Executive shall forfeit the right to receive
any and all further payments hereunder, other than the right to receive
compensation and benefits then due and payable to Executive pursuant to
Article 3 hereof through the date of termination, if Executive shall have
committed any of the following acts of default:
(a) Executive shall have committed any breach of any of the
provisions or covenants of this Agreement;
(b) Executive shall have committed any act of gross
negligence in the performance of his duties or obligations hereunder, or,
without proper cause, shall have willingly refused or neglected to perform his
employment duties or obligations under this Agreement;
(c) Executive shall have committed any act of willful
misconduct, dishonesty, breach of trust, or moral turpitude; or
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(d) Executive shall have been convicted of, or shall have
plead guilty or nolo contendere to, a felony or indictable offense.
5.4 If the Company elects to terminate Executive's
employment hereunder as set forth in Article 5.3, it shall deliver a notice of
such intention to Executive, describing with reasonable detail, the action or
omission of the Executive constituting the act of default (the "Termination
Notice"), and thereupon no further payments of any type shall be made or shall
be due or payable to Executive hereunder, except as provided in the first
sentence of Article 5.2, provided, however, with respect to any act of default
set forth in clauses (a) and (b) of Article 5.2, prior to any termination by
the Company of Executive's employment, Executive shall first have an
opportunity to cure or remedy such act of default within thirty (30) days
following the Termination Notice.
6. Vacation Policy. The Executive shall receive paid vacation
each year in accordance with the Employment Manual of the Company. Vacation
leave may not be carried forward to any subsequent fiscal year unless the
Executive has been requested to delay his vacation due to business
circumstances, as conclusively determined in good faith by the Board of
Directors of the Company.
7. Restrictive Covenants.
7.1 Confidential Information; Covenant not to Disclose. The
Executive covenants and undertakes that he will not at any time during or
after the termination of his employment hereunder reveal, divulge, or make
known to any person, firm, corporation, or other business organization (other
than the Company or its affiliates, if any), or use for his own account any
customer lists, trade secrets, or any secret or any confidential information
of any kind used by the Company during his employment by the Company, and made
known (whether or not with the knowledge and permission of the Company,
whether or not developed, devised, or otherwise created in whole or in part by
the efforts of the Executive, and whether or not a matter of public knowledge
unless as a result of authorized disclosure) to the Executive by reason of his
employment by the Company. The Executive further covenants and agrees that he
shall retain such knowledge and information which he has acquired or shall
acquire and develop during his employment respecting such customer lists,
trade secrets, and secret or confidential information in trust for the sole
benefit of the Company, its successors and assigns.
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7.2 Covenant Not to Compete; Non-Interference.
7.2.1 The Executive covenants and undertakes that, during
the period of his employment hereunder and for a period of two (2) years
hereafter, he will not, without the prior written consent of the Company,
directly or indirectly, and whether as principal, agent, officer, director,
employee, consultant, or otherwise, alone or in association with any other
person, firm, corporation, or other business organization, carry on, or be
engaged, concerned, or take part in, or render services to, or own, share in
the earnings of, or invest in the stock, bonds, or other securities of any
person, firm, corporation, or other business organization (other than the
Company or its affiliates, if any) engaged in a business located in the New
York metropolitan area which is similar to or in competition with any of the
businesses carried on by the Company (a "Similar Business") except in the
course of his employment hereunder; provided, however, that the Executive may
invest in stock, bonds, or other securities of any Similar Business (but
without otherwise participating in the activities of such Similar Business) if
(i) such stock, bonds, or other securities are listed on any national or
regional securities exchange or have been registered under Section 12 (g) of
the Securities Exchange Act of 1934; and (ii) his investment does not exceed,
in the case of any class of the capital stock of any one issuer, two (2%)
percent of the issued and outstanding shares, or in the case of bonds or other
securities, five (5%) percent of the aggregate principal amount thereof issued
and outstanding.
7.2.2 The Executive covenants and undertakes that during the
period of his employment hereunder and for a period of two (2) years
thereafter will not, whether for his own account or for the account of any
other person, firm, corporation or other business organization, interfere with
the Company's relationship with, or endeavor to entice away from the Company,
any person, firm, corporation or other business organization who or which at
any time during the term of the Executive's employment with the Company was an
employee, consultant, agent, supplier, or a customer of, or in the habit of
dealing with, the Company.
7.2.3 If any provision of this Article 7.2 is held by any
court of competent jurisdiction to be unenforceable because of the scope,
duration or area of applicability, such provision shall be deemed modified to
the extent the court modifies the scope, duration or area of applicability of
such provision to make it enforceable.
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7.3 Covenant to Report; Patents, etc.
7.3.1 The Executive shall promptly communicate and disclose
to the Company all inventions, discoveries, improvements and new writings, in
any form whatsoever (hereinafter "Inventions"), including, without limitation,
all software, programs, technologies, products, routines, techniques,
procedures, training aides and instructional manuals conceived, developed or
made by him during his employment by the Company, whether solely or jointly
with others, and whether or not patentable or copyrightable: (a) which relate
to any matters or business of the type carried on or being developed by the
Company, or (b) which result from or are suggested by any work done by him in
the course of his employment by the Company. The Executive shall also promptly
communicate and disclose to the Company all other data obtained by him
concerning the business or affairs of the Company in the course of his
employment by the Company.
7.3.2 All written materials, records and documents (in any
form) made by the Executive or coming into his possession during the Term
concerning the business or affairs of the Company shall be the sole property
of the Company, and, upon the termination of the Term or upon the request of
the Company during the Term, the Executive shall promptly deliver the same to
the Company. The Executive agrees to render to the Company such reports of the
activities undertaken by the Executive or conducted under the Executive's
direction pursuant hereto during the Term as the Company may request.
7.3.3 The Executive will assign to the Company all right in
the Inventions and will assist the Company or its designee during or
subsequent to his employment, at the Company's sole expense, in filing patent
and/or copyright applications on, and obtaining for the Company's benefit,
patents and/or copyrights for, such Inventions in any and all countries, and
will assign to the Company all such patent and/or copyright applications, all
patents and/or copyrights which may issue thereon, said Inventions to be and
remain the sole and exclusive property of the Company or its designee whether
or not patented and/or copyrighted.
7.3.4 Any Invention conceived, developed or made by the
Executive within one (1) year of the termination of his employment, whether
such termination of employment is voluntary or involuntary, shall be deemed to
have arisen out of and been conceived, developed or
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made by the Executive during his employment by the Company, unless established
to have been conceived, developed or made after the termination of such
employment.
8. Injunction. It is recognized and hereby acknowledged by the
Executive that a breach or violation by the Executive of any of the covenants
or agreements contained in this Agreement may cause irreparable harm and
damage to the Company hereto, the monetary amount of which may be virtually
impossible to ascertain. As a result, the Executive recognizes and
acknowledges that the Company shall be entitled to an injunction, without
posting any bond or security in connection therewith, from any court of
competent jurisdiction enjoining and restraining any breach or violation of
any of the restrictive covenants contained in Article 7 of this Agreement by
the Executive or his associates, partners or agents, either directly or
indirectly, and that such right to injunction shall be cumulative and in
addition to whatever other rights or remedies the Company may possess. Nothing
contained in this Article 8 shall be construed to prevent the Company from
seeking and recovering from the Executive damages sustained as a result of any
breach or violation by the Executive of any of the covenants or agreements
contained in this Agreement, and that in the event of any such breach, the
Company shall avail itself of all remedies available both at law and at
equity.
9. Compliance with Other Agreements. The Executive represents and
warrants to the Company that the execution of this Agreement by him and his
performance of his obligations hereunder will not, with or without the giving
of notice, the passage of time or both, conflict with, result in the breach of
any provision of or the termination of, or constitute a default under, any
agreement to which the Executive is a party or by which the Executive is or
may be bound.
10. Miscellaneous.
10.1 Notices. Any notice or other communication to a party
under this Agreement shall be in writing, and if by use of the mail shall be
considered given when mailed by certified mail, return receipt requested, to
the party at the following address or at such other address as the party may
specify by notice to the other in the manner provided for herein:
(a) If to the Company:
Xxxxxx Electronics, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000 (the "Company")
Attention: Chairman, Board of Directors,
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with a copy to:
Ruskin, Moscou, Xxxxx & Faltischek, P.C.
000 Xxx Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx, Esq.; and
(b) If to the Executive:
00 Xxxxxxx Xxxxxx
Xxxxxx Xxxxxx, Xxx Xxxx 00000
10.2 Benefit. This Agreement shall be binding upon and inure
to the benefit of the respective parties hereto and their legal
representatives, successors and assigns. Insofar as the Executive is concerned
this Agreement, being personal, cannot be assigned.
10.3 Validity. The invalidity or unenforceability of any
provisions hereof shall in no way affect the validity or enforceability of any
other provision.
10.4. Entire Agreement. Subject to Section 10.11, the
Agreement constitutes the entire Agreement between the parties. It may only be
changed or terminated by an instrument in writing signed by both parties. The
covenants of the Executive contained in Article 7 of this Agreement shall
survive the termination of this Agreement and the expiration of the Term.
10.5 New York Law to Govern. This Agreement shall be
governed by, construed and interpreted in accordance with the laws of the
State of New York.
10.6 Corporate Action. The execution and delivery of this
Agreement by the Company has been authorized and approved by all requisite
corporate action.
10.7 Waiver of Breach. The failure of a party to insist on
strict adherence to any term of this Agreement on any occasion shall not be
considered a waiver or deprive that party of the right thereafter to insist
upon strict adherence to that term or any term of this Agreement. Any waiver
hereto must be in writing.
10.8 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
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10.9 Paragraph Headings. Paragraph headings are inserted
herein for convenience only and are not intended to modify, limit or alter the
meaning of any provision of this Agreement.
10.10 No Adverse Construction. The right to apply the rule
that an agreement is to be construed against the party drafting the agreement
is hereby waived, and shall have no applicability in construing this Agreement
or any provision hereof.
10.11 Severance Agreement. This Agreement shall be treated
as a supplement to the Severance Agreement and shall not substitute, supersede
or replace, to any extent, the Severance Agreement.
IN WITNESS WHEREOF, the parties hereto have set their hands and
executed this Agreement as of the day and year first above written.
XXXXXX ELECTRONICS, INC.
By:_________________________________
Xxxxxxx Xxxxx, Chairman
____________________________________
XXXXXXXX X. XXXX
