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EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT made as of the 1st day of January, 2001 by
and between ULTRASTRIP SYSTEMS, INC., a Florida corporation (the "Company"), and
XXXXXX X. XXXXXXX ("Executive").
In consideration of the mutual covenants and agreements herein
contained, the compensation to be paid hereunder and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Term of Employment. The Company hereby employs Executive and Executive hereby
accepts employment with the Company for a term (the "Term") of three (3) years
beginning on July 1, 2001 (the "Effective Date"). The Term shall be extended for
an additional twelve (12) month period on the provisions herein set forth on
each June 30th during the Term unless the Company shall have notified Executive
prior to such date that the Agreement shall not be extended.
2. Title; Duties of Executive. During the Term, Executive shall continue to be
employed by the Company as its co-Chief Executive Officer (along with Xxxx X.
Xxxxxxx) and shall devote his efforts to rendering services to the Company in
such capacity. Executive shall conduct the business of the Company and have
responsibility for the active management, control and supervision of the
business and affairs of the Company subject only to the supervision and control
of the Company's Board of Directors (the "Board"). Executive's powers and
authority shall be superior to those of any other officer or employee of the
Company other than Xx. Xxxxxxx, who shall have equal powers and authority so
long as he continues to serve the Company as co-Chief Executive Officer.
Executive shall not be required without his consent to undertake
responsibilities not commensurate with his position.
3. Commitment. During the Term, Executive shall devote substantially all of his
productive time, ability and attention to the business of the Company, except
that Executive may undertake or continue to conduct other business, civic or
charitable activities that do not interfere in any material respect with his
duties hereunder. Executive may hold outside directorships subject to approval
by the Board and may retain all compensation from such service. The Company
expressly acknowledges and agrees that Executive may remain chairman of the
board and/or a director of FPIC Insurance Group, Inc.
4. Compensation of Executive.
(a) Base Salary. Executive shall be entitled to receive from the
Company a base salary ("Base Salary") of two hundred seventy five thousand
dollars ($275,000) per year, payable in accordance with the normal payroll
practices of the Company. Once the Company's gross revenues reach five million
dollars ($5,000,000), Base Salary shall increase to two hundred eighty five
thousand dollars ($285,000) per year. Once the Company's gross revenues reach
ten million dollars ($10,000,000), Base Salary shall increase to two hundred
ninety five thousand
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dollars ($295,000) per year. Once the Company's gross revenues reach fifteen
million dollars ($15,000,000), Base Salary shall increase to three hundred five
thousand dollars ($305,000) per year. Subsequent raises, if any, may be awarded
by the Board in its discretion.
(b) Bonuses. As additional compensation, the Company shall (i) grant to
Executive as a signing bonus as of the date of this Agreement an option to
acquire one million (1,000,000) shares of common stock at an exercise price of
three dollars ($3.00) per share, exercisable without vesting restrictions
through June 30, 2007, and (ii) pay Executive an annual cash bonus in the amount
of one percent (1%) of the Company's gross revenues over the preceding twelve
(12) month period running from July 1st through June 30th of each year of the
Term. Each cash bonus shall be payable to Executive thirty (30) days following
the date the Company's gross revenues for the applicable twelve (12) month
period becomes determinable.
(c) Stock Options. As additional compensation, Executive shall be
granted as of the date of this Agreement three (3) options to acquire an
aggregate of one million five hundred thousand (1,500,000) shares of common
stock at an exercise price of three dollars ($3.00) per share:
(i) Option No. 1 shall terminate if Executive is not employed
by the Company on January 1, 2002 and shall be exercisable for five hundred
thousand (500,000) shares beginning July 1, 2002 as follows: If the Company's
earnings before interest, taxes, depreciation and amortization ("EBITDA") for
the twelve (12) month period running from July 1, 2001 through June 30, 2002
reaches two million dollars ($2,000,000), then one hundred thousand (100,000)
shares may be purchased; if EBITDA for that period reaches four million dollars
($4,000,000), then two hundred thousand (200,000) shares may be purchased; if
EBITDA for that period reaches six million dollars ($6,000,000), then three
hundred thousand (300,000) shares may be purchased; if EBITDA for that period
reaches eight million dollars ($8,000,000), then four hundred thousand (400,000)
shares may be purchased; and if EBITDA for that period reaches ten million
dollars ($10,000,000), then all five hundred thousand (500,000) shares may be
purchased.
(ii) Option No. 2 shall terminate if Executive is not employed
by the Company on January 1, 2003 and shall be exercisable for five hundred
(500,000) shares beginning July 1, 2003 as follows: If the Company's EBITDA for
the twelve (12) month period running from July 1, 2002 through June 30, 2003
reaches six million dollars ($6,000,000), then one hundred thousand (100,000)
shares may be purchased; if EBITDA for that period reaches eight million dollars
($8,000,000), then two hundred thousand (200,000) shares may be purchased; if
EBITDA for that period reaches ten million dollars ($10,000,000), then three
hundred thousand (300,000) shares may be purchased; if EBITDA for that period
reaches twelve million dollars ($12,000,000), then four hundred thousand
(400,000) shares may be purchased; and if EBITDA for that period reaches
fourteen million dollars ($14,000,000), then all five hundred thousand (500,000)
shares may be purchased.
(iii) Option No. 3 shall terminate if Executive is not
employed by the Company on January 1, 2004 and shall be exercisable for five
hundred thousand (500,000) shares beginning July 1, 2004 as follows: If the
Company's EBITDA for the twelve (12) month
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period running from July 1, 2003 through June 30, 2004 reaches ten million
dollars ($10,000,000), then one hundred thousand (100,000) shares may be
purchased; if EBITDA for that period reaches twelve million dollars
($12,000,000), then two hundred thousand (200,000) shares may be purchased; if
EBITDA for that period reaches fourteen million dollars ($14,000,000), then
three hundred thousand (300,000) shares may be purchased; if EBITDA for that
period reaches sixteen million dollars ($16,000,000), then four hundred thousand
(400,000) shares may be purchased; and if EBITDA for that period reaches
eighteen million dollars ($18,000,000), then all five hundred thousand (500,000)
shares may be purchased.
Option Xx. 0, Xxxxxx Xx. 0 and Option No. 3 shall expire on June 30, 2007, June
30, 2008 and June 30, 2009, respectively.
(d) Fringe Benefits. The Company shall provide to Executive the
following fringe benefits:
(i) Executive and his spouse shall be included as
beneficiaries at the Company's expense under the Company's group health
insurance policy; and
(ii) The Company shall pay Executive a car allowance of seven
hundred dollars ($700) per month.
Executive shall be entitled to participate in any employee benefit programs made
available to the Company's executive officers including, without limitation, any
qualified pension or profit-sharing plan, retirement savings plan, deferred
compensation plan or employee stock purchase plan.
(e) Vacation. Executive shall be entitled to four (4) weeks off for
vacation at full pay during each twelve (12) month period of the Term hereof.
The parties acknowledge that Executive may perform his duties hereunder during
the summer from his home in Maine, which shall not be considered vacation time.
5. Reimbursement of Executive Expenses. In the course of his employment
Executive shall be expected to incur various business expenses customarily
incurred by persons holding like positions, including, but not limited to,
traveling, entertainment and similar expenses, for the benefit of the Company.
Subject to the Company's policy regarding the reimbursement of such expenses,
the Company shall reimburse Executive for such expenses from time to time, at
Executive's request, and Executive shall account to the Company for such
expenses. Executive's travel expenses to and from Maine during the summer
incurred on behalf of the Company shall be reimbursable.
6. Termination by the Company.
(a) The Company shall have the right to terminate this Agreement under
the following circumstances:
(i) Upon the death of Executive;
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(ii) Upon notice from the Company to Executive in the event of
an illness or other disability which has incapacitated him from performing his
duties for twelve (12) consecutive weeks as determined in good faith by the
Board; or
(iii) For "good cause" upon notice from the Company.
Termination by the Company of Executive's employment for "good cause" shall be
limited to the following circumstances:
(A) Executive is convicted of, pleads guilty to or
pleads nolo contendere to a felony crime involving moral turpitude;
(B) Executive is found guilty of or pleads no contest
to fraud, conversion, embezzlement, falsifying records or reports or a similar
crime involving the Company's property;
(C) Executive willfully breaches this Agreement in a
material way, which breach remains uncured thirty (30) days after written notice
thereof shall have been sent to Executive;
(D) The voluntary resignation by Executive as an
employee of the Company (except pursuant to Section 7); or
(E) Insubordination or incompetence, as reasonably
determined by the Board after Executive has had the opportunity to address the
Board with respect to the matter.
(b) If this Agreement is terminated pursuant to Section 6(a) above,
Executive's rights and the Company's obligations hereunder shall forthwith
terminate except as expressly provided below.
(c) If this Agreement is terminated pursuant to Section 6(a)(i) or (ii)
hereof, Executive or his estate shall be entitled to receive:
(i) A cash payment equal to Executive's Base Salary hereunder
for a three (3) month period, payable within thirty (30) days of the date of
such termination; and
(ii) All bonuses granted to Executive pursuant to Section 4(b)
above.
The Company may purchase insurance to cover all or any part of its obligations
set forth in this Section 6(c), and Executive agrees to take a physical
examination to facilitate the obtaining of such insurance. However, death and
disability benefits are not conditioned upon the Executive's insurability or the
Company's obtaining insurance.
(d) Whenever compensation is payable to Executive hereunder during a
time when he is partially or totally disabled and such disability (except for
the provisions hereof) would entitle him to disability income or to salary
continuation payments from the Company according to the terms of any plan now or
hereafter provided by the Company or according to any Company
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policy in effect at the time of such disability, the compensation payable to him
hereunder shall be inclusive of any disability income or salary continuation and
shall not be in addition thereto. If disability income is payable directly to
Executive by an insurance company under an insurance policy paid for by the
Company, the amounts paid to him by such insurance company shall be considered
to be part of the payments to be made by the Company to him pursuant to this
Section, and shall not be in addition thereto.
7. Termination by Executive. Executive shall have the right to terminate his
employment under this Agreement upon thirty (30) days' notice to the Company
given within sixty (60) days following the occurrence of any of the following
events:
(a) Executive is not appointed or retained as co-Chief Executive
Officer of the Company;
(b) The Board materially reduces Executive's duties and
responsibilities hereunder. Executive's duties and responsibilities shall not be
deemed materially reduced for purposes hereof solely by virtue of the fact that
the Company is (or substantially all of its assets are) sold to, or is combined
with, another entity provided Executive shall (i) continue to have the same
duties and responsibilities with respect to the Company's core business, and
(ii) report directly to the board of directors of the entity that acquires the
Company or its assets; or
(c) The Company shall have notified Executive prior to June 30th in any
year during the Term that the Agreement shall not be extended.
8. Consequences of Breach by the Company.
(a) If the Company shall terminate Executive's employment under this
Agreement for any reason other than as set forth in Section 6(a) or if Executive
terminates this Agreement under Section 7, the following shall apply:
(i) Executive shall continue to receive his Base Salary
hereunder for the remainder of the Term provided that he does not breach Section
10 below;
(ii) Executive shall be entitled to all bonuses granted to him
pursuant to Section 4(b) above; and
(iii) Executive shall continue to receive all the fringe
benefits described in Section 4(d) above for the remainder of the Term provided
that he does not breach Section 10 below.
(b) If any benefits under the preceding subsection is finally
determined by the Internal Revenue Service to be an "Excess Parachute Payment"
under Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code"), the Company shall pay Executive an additional amount such that (x) the
excess of all Excess Parachute Payments (including payments under this sentence)
over the sum of excise tax thereon under Section 4999 of the Code and income tax
thereon under Subtitle A of the Code and under applicable state law is equal to
(y)
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the excess of all Excess Parachute Payments (excluding payments under this
sentence) over income tax thereon under Subtitle A of the Code and under
applicable state law.
9. Remedies. The Company recognizes that because of Executive's special talents
and stature, in the event of termination by the Company hereunder (except under
Section 6(a)), or in the event of termination by Executive under Section 7
before the end of the Term, the Company acknowledges and agrees that the
provisions of this Agreement regarding further payments of Base Salary, bonuses
and benefits constitute fair and reasonable provisions for the consequences of
such termination, do not constitute a penalty, and such payments and benefits
shall not be limited to or reduced by amounts Executive might earn or be able to
earn from any other employment or ventures during the remainder of the Term of
this Agreement.
10. Covenant Not To Compete; Disclosure of Information. Executive agrees to
receive confidential and proprietary information of the Company in strict
confidence, and not to disclose such information to others except as authorized
in writing by the Board or as required by law. Confidential and proprietary
information shall mean information not generally known to the public that is
created by or disclosed to Executive as a consequence of his employment by the
Company. Additionally, for a two (2) year period following the termination
pursuant to Section 6(a)(ii) or (iii) or the expiration hereof, Executive shall
not engage in any activities substantially similar to or in competition with the
business of the Company.
11. Notices and Demands. Any notice or demand which, by any provision of this
Agreement or any agreement, document or instrument executed pursuant hereto,
except as otherwise provided therein, is required or provided to be given shall
be deemed to have been sufficiently given or served for all purposes if sent by
certified or registered mail, postage and charges prepaid, to the following
addresses: if to the Company, Attention: Chairman of the Board, 0000 X.X. Xxxxxx
Xxxxxxx, Xxxxxx, Xxxxxxx 00000, or at any other address designated by the
Company to Executive in writing, and if to Executive, 00 X.X. Xxxxxx Xxxxx
Xxxxx, Xxxxxx, Xxxxxxx 00000 or at any other address designated by Executive to
the Company in writing.
12. Severability. In case any covenant, condition, term or provision contained
in this Agreement shall be held to be invalid, illegal or unenforceable in any
respect, in whole or in part, by judgment, order or decree of any court or other
judicial tribunal of competent jurisdiction, from which judgment, order or
decree no further appeal or petition for review is available, the validity of
the remaining covenants, conditions, terms and provisions contained in this
Agreement, and the validity of the remaining part of any term or provision held
to be partially invalid, illegal or unenforceable, shall in no way be affected,
prejudiced or disturbed thereby.
13. Waiver or Modification. No waiver or modification of this Agreement or of
any covenant, condition or limitation herein contained shall be valid unless in
writing and duly executed by the party to be charged therewith. Furthermore, no
evidence of any waiver or modification shall be offered or received in evidence
in any proceeding, arbitration or litigation between the parties arising out of
or affecting this Agreement, or the rights or obligations of any party
hereunder, unless such waiver or modification is in writing and duly executed as
aforesaid. The provisions of this Section may not be waived except as herein set
forth.
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14. Complete Agreement. This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter of this Agreement and
supersedes any and all previous agreements between the parties, whether written
or oral, with respect to such subject matter.
15. Applicable Law, Binding Effect and Venue. This Agreement shall be construed
and regulated under and by the laws of the State of Florida, and shall inure to
the benefit of and be binding upon the parties hereto and their heirs, personal
representatives, successors and assigns. Venue for any action related to or
arising out of this Agreement shall lie in Xxxxxx County, Florida.
IN WITNESS WHEREOF, the undersigned have executed this Employment Agreement as
of the date first written above with the intent to be legally bound.
ULTRASTRIP SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
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XXXXXX X. XXXXXXX
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