AMENDED AND RESTATED EMPLOYMENT AGREEMENT, dated September 1,
2002 (the "Effective Date") by and between XXXXXXXX.XXX, INC., a Delaware
corporation (the "Company" or "Paragon"), and Xxxx Xxxxxx, (the "Executive").
WHEREAS, the Company and the Executive entered into an
employment agreement as of June 1, 2002 (the "Original Employment Agreement")
which set forth the terms under which the Executive shall be employed by of the
Company and upon which the Company shall compensate the Executive;
WHEREAS, the Company and the Executive desire to amend and
restate the Agreement in its entirety, effective as of the Effective Date, upon
the terms and conditions hereof.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants hereinafter set forth, the parties hereto have agreed, and do
hereby agree, as follows:
1. EMPLOYMENT; TERM
The Company will employ the Executive in its business, and the
Executive will work for the Company therein, as the Company's Chairman of the
Board of Directors for a term commencing as of the Effective Date and
terminating on August 31, 2005 (the "Employment Period"). The Company may
terminate such employment at any time for "cause". As used in this Agreement,
"cause" shall include, but not necessarily be limited to, the Executive's
commission of any act in the performance of his duties constituting common law
fraud, a felony or other gross malfeasance of duty, any misrepresentation or
breach of any covenant on the Executive's part herein set forth, violation of
federal or state securities laws, rules or regulations or violation of NASDAQ or
other stock exchange rules or regulations for which the Executive is found
guilty or liable or he agrees to pay fines or suffer sanctions or injunctive
relief whether or not he is found to be guilty or liable, or the Executive's
engagement in misconduct or activities which is materially injurious to the
Company or its subsidiaries or which brings the Company or its subsidiaries
and/or the Company's Board of Directors into disrepute.
2. DUTIES
2.1 During the Employment Period, Executive shall serve as the
Company's Chairman of the Board of Directors. As Chairman of the Board of
Directors of the Company, Executive shall generally promote the interests of the
Company in accordance with the parameters set forth herein, and participate with
other directors, as well as with members of management of the Company to analyze
and develop the Company's business plans and strategies, including the
identification and acquisition of suitable business entities. He is authorized
to execute any reports, statements or documents which the Company files with the
Securities and Exchange Commission, any state securities agency, self regulatory
organization or stock exchange.
2.2 The Executive may in his discretion, perform his duties
hereunder via telephone, telecopier or e-mail from any location, or in person at
the Company's offices in which shall be located at a yet to be determined
address in or near Ponte Vedra Beach, Florida.
3. DEVOTION OF TIME
3.1 During the Employment Period, the Executive shall devote
his best efforts, abilities, knowledge and experience to the faithful
performance of the duties, responsibilities and authorizes within the scope of
the parameters sated below. Notwithstanding the preceding, the Executive shall
not take part in activities detrimental to the best interests of the Company,
nor which shall prevent the Executive from fulfilling his obligations to the
Company hereunder.
3.2 The Company acknowledges that the Executive has duties,
responsibilities and interests outside the scope of this Employment Agreement,
and except as otherwise provided herein, the Executive is not restricted in
pursuing such other duties, responsibilities and interests.
3.3 Executive may fulfill, at a minimum, his annual commitment
to the United States Navy of approximately thirty (30) business days of Annual
Active Duty and twenty-four (24) days of Drill Weekend Training during each
calendar year, exclusive of reasonable travel time associated with discharging
said obligations. Additionally, Company acknowledges that Executive maintains
significant ownership interests in Technology Ventures, Inc. and Palm Valley
Ventures, LLC, both of which obligate certain ongoing time and managerial
responsibilities.
4. COMPENSATION
4.1 For all services to be rendered by the Executive during
the Employment Period and in consideration of the Executive's representations
and covenants set forth in this Agreement, the Executive shall be entitled to
the compensation set forth in Paragraph 4.2.
4.2 The Executive shall be entitled to receive from the
Company during the Employment Period minimum compensation at the rate of Two
Hundred Thousand Dollars ($200,000) per annum (the "Salary"). The Executive
shall be entitled to such additional increments as shall be determined from time
to time by the Board of Directors of the Company. All amounts due hereunder
shall be payable in accordance with the Company's standard payroll practices,
and shall accrue until the Company has secured initial investments of at least
Five Hundred Thousand Dollars ($500,000) (the "Initial Investment"), or has
completed its first acquisition, whichever occurs first. It is acknowledged that
the Executive's Salary under the Original Employment Agreement has accrued at
the rate of One Hundred Eighty Thousand Dollars ($180,000) per annum until May
31, 2002, and as amended on June 1, 2002 at the rate of One Hundred Twenty
Thousand Dollars ($120,000) per annum through August 31, 2002. After the Initial
Investment closes, the Company shall commence paying all Salary thereafter
earned by the Executive, but not the Salary accrued prior thereto, as set forth
above. On the earlier of (a) the date (the "Operating Company Acquisition Date")
that the Company closes its first acquisition or business combination with an
operating financial services company, or (b) the date the Company and/or its
parent, XxxxxxXx.xxx, Inc., a Delaware corporation ("PlanetRx") has raised an
aggregate of One Million Five Hundred Thousand Dollars ($1,500,000) in funding,
including without limitation, the Initial Investment and any debt or equity
funding obtained by the Company and/or PlanetRx thereafter, the unpaid Salary
which accrued under the Original Employment Agreement, and hereunder from the
Effective Date until the closing of the Initial Investment, shall be paid
immediately in one (1) lump sum.
5. REIMBURSEMENT OF EXPENSES
The Company shall pay directly, or reimburse the Executive
for, all reasonable and necessary expenses and disbursements incurred by the
Executive for and on behalf of the Company in the performance of his duties
during the Employment Period, during the Employment Period under the Original
Employment Agreement, and expenses incurred by Executive on behalf of the
Company prior to entry into the Original Employment Agreement (relating to the
establishment and operation of the Company, among other things) including,
without limitation, all reasonable expenses incurred by the Executive for food,
lodging and transportation, if he is required to perform any of his duties away
from his primary place of residence. For such purposes, the Executive shall
submit to the Company, not less than once in each calendar month, reports of
such expenses and other disbursements in form normally used by the Company.
6. DISABILITY
If, during the Employment Period, the Executive shall, in the
opinion of a majority of the members of the Board of Directors of the Company
(excluding the Executive), as confirmed by competent medical evidence, become
physically or mentally incapacitated to perform his duties for the Company
hereunder ("Disabled") for a continuous period of thirty (30 days, then the
Company shall have the right, by written notice, to terminate the Executive's
employment hereunder as of a date (not less than five (5) days after the date of
the sending of such notice) to be specified in such notice. The Executive agrees
to submit himself for appropriate medical examination to a physician of the
Company's designation as necessary for purposes of this Paragraph 6. In no event
shall the Executive be entitled to receive any payments under this Paragraph 6
beyond the expiration or termination date of this Agreement.
7. RESTRICTIVE COVENANT
7.1 (a) The Executive represents that he has been informed
that it is the policy of the Company to maintain as secret all Confidential
Information (as hereinafter defined) relating to the Company, including, without
limitation, any and all knowledge or information with respect to secret or
confidential methods, processes, plans, materials, customer lists or data, or
with respect to any other confidential or secret aspect of the Company's
activities, and further acknowledges that such Confidential Information is of
great value to the Company. The Executive recognizes that, by reason of his
employment with the Company, he has acquired and will acquire Confidential
Information as aforesaid. The Executive confirms that it is reasonably necessary
to protect the Company's goodwill, and, accordingly, hereby agrees that he will
not, directly or indirectly (except
where authorized by the Board of Directors of the Company for the benefit of the
Company or as requested by law, or regulation or applicable legal regulatory or
administrative process or by a court of competent jurisdiction), at any time
during the term of this Agreement or thereafter divulge to any person, or use,
or cause or authorize any person, firm or other entity to use, any such
Confidential Information.
(b) The Executive agrees that, upon the expiration or
termination of this Agreement for any reason whatsoever, he shall promptly
deliver to the Company any material relating to any Confidential Information,
Discoveries or Trade Secrets (as hereinafter defined), as well as all memoranda,
notes, records, drawings, documents, or other writings whatsoever made,
compiled, acquired, or received by the Executive during the term of this
Agreement, arising out of, in connection with, or related to any activity or
business of the Company including, but not limited to, the customers, suppliers,
or others with whom the Company has a business relationship, the arrangements of
the Company with such parties, as well as any expansion policies and strategies
for the future growth of the Company, and the Executive further agrees that all
of the above mentioned items are, and shall continue to be, the sole and
exclusive property of the Company, as applicable, and shall, together with all
copies thereof, be returned and delivered to the Company within five (5) days of
the termination of this Agreement, or at any time upon the Company's demand.
(c) For purposes hereof, the term "Confidential
Information" shall mean all information given to the Executive, directly or
indirectly, including, but not limited to, all correspondence, memoranda, files,
manuals, books, lists, financial, operating or marketing records, magnetic tape,
floppy disks, CD-ROMS, or any other means of storing electronic data, as well as
any electronic or other media or equipment of any kind by the Company and all
other information relating to the Company otherwise acquired by the Executive
during the course of his employment with the Company, other than information
which (i) was in the public domain at the time furnished to, or acquired by, the
Executive, or (ii) thereafter enters the public domain other than through
disclosure, directly or indirectly, by the Executive or others in violation of
an agreement of confidentiality or nondisclosure.
7.2 For purposes of this Paragraph 7, the term "Company" shall
mean and include subsidiary and any and all other subsidiaries, parents and
affiliated entities of the Company in existence from time to time.
8. VACATIONS
The Executive shall be entitled to reasonable vacations during
the Employment Period, the time and duration thereof to be determined by mutual
agreement between the Executive and the Company.
9. BENEFITS; PARTICIPATION IN EXECUTIVE BENEFIT PLANS
9.1 The Executive and any beneficiary of the Executive shall
be accorded the right to participate in and receive benefits under and in
accordance with the provisions of any pension, profit sharing, insurance, bonus,
deferred compensation, medical and dental insurance or reimbursement or other
plan or program of the Company either in existence as of the date hereof or
hereafter adopted for the benefit of its executive employees.
9.3 During the term of this Agreement, the Company shall
provide the Executive with a monthly automobile allowance in a reasonable amount
to be mutually determined by the Executive and the Company. Any allowance due
the Employee pursuant to the preceding provisions of this paragraph shall accrue
until the Operating Company Acquisition Date and shall be paid by the Company
monthly thereafter.
10. SERVICE AS OFFICER OF SUBSIDIARIES AND PARENT; SERVICE AS
DIRECTOR
During the Employment Period, the Executive shall, if elected
or appointed, serve as (a) an officer of the parent and/or any subsidiaries of
the Company in existence or hereafter created or acquired, (b) a Director of the
Company and/or any such parent and/or subsidiaries of the Company, in each case
without any additional compensation for such services.
11. EARLIER TERMINATION
11.1 The Executive's employment hereunder shall automatically
terminate upon his death.
11.2 The Company may terminate this Agreement at its option
upon:
(a) the Executive's incapacity in accordance with the
provisions set forth in Paragraph 6.l hereof;
(b) one (1) day's prior written notice to the
Executive in the event the Company terminates his employment hereunder for cause
as set forth in Paragraph 1 hereof;
(c) the Executive's voluntarily leaving the employ of
the Company; or
(d) at any time within twelve (12) months after a
Change in Control (as hereinafter defined) immediately upon written notice to
the Executive without any further liability hereunder to the Executive except to
the extent set forth in Section 11.4 hereof. For purposes of this Agreement, the
terms "Change of Control" shall mean, except in connection with, or in relation
to, a capital raising transaction:
(1) The transfer, through one transaction or
a series of related transactions, either directly or indirectly, or through one
or more intermediaries, of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934) of 25% or more of either the then outstanding shares of
common stock or the combined voting power of Paragon's then outstanding voting
securities entitled to vote generally in the election of directors, or the last
of any series of transfers that results in the transfer of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act
of 1934) of 25% or more of either the then outstanding shares of common stock or
the combined voting power of Paragon's then outstanding voting securities
entitled to vote generally in the election of directors;
(2) Approval by the shareholders of Paragon
of a merger or consolidation, with respect to which persons who were the
shareholders of Paragon immediately prior to such merger or consolidation do
not, immediately thereafter, own more than 50% of the combined voting power
entitled to vote generally in the election of directors of the merged or
consolidated company's then outstanding voting securities, or a liquidation or
dissolution of the Company or the sale of all or substantially all of the assets
of the Company;
(3) The transfer, through one transaction or
a series of related transactions, of more than 50% of the assets of the Company,
or the last of any series of transfers that result in the transfer of more than
50% of the assets of the Company. For purposes of this paragraph, the
determination of what constitutes more than 50% of the assets of the Company
shall be determined based on the most recent financial statement prepared by the
Company's independent accountants; or
(4) During any calendar year, individuals
who at the beginning of such year constituted the Board of Directors of Paragon
and any new director or directors whose election by the Board of Directors was
approved by a vote of a majority of the directors then still in office who
either were directors at the beginning of the year or whose election or
nomination for election was previously so approved, cease for any reason to
constitute a majority thereof provided, however, that this provision will not be
triggered in the event the Executive votes or causes other stockholders to vote
their shares to cause said change to the directorship of the Company.
11.3 The Executive may terminate this Agreement at any time
within twelve (12) months after a Change in Control, upon thirty (30) days prior
written notice to the Company. In such case, the Company will have no further
liability hereunder to the Executive, except to the extent set forth in
Paragraph 11.4 hereof.
11.4 (a) Except as provided below in Paragraph 11.4(b) upon
termination of the Executive's employment with the Company, the Company shall
have no further obligations to the Executive and the Executive shall be entitled
to no further compensation from the Company, except for any pro-rata amounts due
to the Executive at such date of termination, as provided for in Paragraph 4.2.
(b) In the event this Agreement is terminated by the
Company pursuant to the provisions of Paragraph 11.2(d) hereof or by the
Executive pursuant to the provisions of Paragraph 11.3 hereof after the
occurrence of a Change of Control, the Executive shall be entitled to receive
(a)
any accrued, but unpaid, Salary, (b) any authorized but unreimbursed business
expenses and any vacation or sick leave benefits which have accrued as of the
date of termination of the Agreement, but were then unpaid or unused, (c) any
accrued but unpaid bonus, and (d) an amount equal to One Hundred (100%) percent
of the pro-rated monthly Salary amount payable hereunder for the unexpired
Employment Period of the Agreement whether or not the Executive has sought or
obtained employment elsewhere after the termination of the Executive's
employment pursuant to the provisions of Paragraph 11.2(d) or Paragraph 11.3
hereof. Any amount due the Executive under clauses (a), (b), (c) and/or (d) of
this paragraph shall be paid in a lump sum in cash within thirty (30) days after
the termination of the Executive's employment hereunder, the Company at its
expense shall continue to provide the Executive with the medical and dental
benefits set forth in Paragraph 9 above for the unexpired Employment Period of
this Agreement whether or not the Executive has sought or obtained employment
elsewhere after the termination of the Executive's employment; provided,
however, if the Executive obtains employment elsewhere during the aforesaid
period, then the Company shall continue to provide the benefits set forth in
Paragraph 9 hereof only to the extent the Executive does not receive such
benefits in their entirety from the Executive's current employer. Upon payment
of the amount, if any, due the Executive pursuant to this Paragraph 11.4(b), the
Company shall have no further obligation to the Executive under this Agreement.
11.5 Upon the termination of the Executive's employment, the
Employment Period shall be deemed to have ended. Notwithstanding anything to the
contrary herein, in the case of termination because of a Change in Control
pursuant to the provisions of Paragraph 11.2(d) or Paragraph 11.3 hereof, the
provisions of Paragraph 7 hereof shall continue and remain in full force and
effect as if the Employment Period continues to expiration on the original
expiration date set forth in Paragraph 1 hereof.
12. INJUNCTIVE RELIEF
The Executive acknowledges and agrees that, in the event he
shall violate any of the restrictions of Paragraph 3 or 7 hereof, the Company
will be without an adequate remedy at law and will therefore be entitled to
enforce such restrictions by temporary or permanent injunctive or mandatory
relief in any court of competent jurisdiction without the necessity of proving
damages and without prejudice to any other remedies which it may have at law or
in equity. The Executive acknowledges and agrees that, in addition to any other
state having proper jurisdiction, any such relief may be sought in, and for such
purpose the Executive consents to the jurisdiction of, the courts of the State
of Florida.
13. NO RESTRICTIONS
The Executive hereby represents that neither the execution of
this Agreement nor his performance hereunder will (a) violate, conflict with or
result in a breach of any provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under
the terms, conditions or provisions of any contract, agreement or other
instrument or obligation to which the Executive is a party, or by which he may
be bound, or (b) violate any order, judgment, writ, injunction or decree
applicable to the Executive. In the event of a breach hereof, in
addition to the Company's right to terminate this Agreement, the Executive shall
indemnify the Company and hold it harmless from and against any and all claims,
losses, liabilities and expenses (including reasonable attorneys' fees) incurred
or suffered in connection with or as a result of the Company's entering into
this Agreement or employing the Executive hereunder.
14. ARBITRATION
14.1 Except with regard to Paragraph 12 hereof and any other
matters that are not a proper subject of arbitration, all disputes between the
parties hereto concerning the performance, breach, construction or
interpretation of this Agreement or any portion thereof, or in any manner
arising out of this Agreement or the performance thereof, shall be submitted to
binding arbitration, in accordance with the rules of the American Arbitration
Association (the "AAA"), which arbitration shall be carried out in the manner
hereinafter set forth.
14.2 Within twenty (20) days after written notice by one party
to the other of its demand for arbitration, which demand shall set forth the
name and address of its arbiter, the other party shall select its arbiter and so
notify the demanding party. Within twenty (20) days thereafter, the two arbiters
so selected shall select the third arbiter. The decision of any two (2) arbiters
shall be binding upon the parties. In default of either side naming its arbiter
as aforesaid or in default of the selection of the said arbiter as aforesaid,
the AAA shall designate such arbiter upon the application of either party. The
arbitration proceeding shall take place at a mutually agreeable location in
Jacksonville, Florida or such other location as agreed to by the parties.
14.3 A party who files a notice of demand for arbitration must
assert in the demand all claims then known to that party on which arbitration is
permitted to be demanded. When a party fails to include a claim through
oversight, inadvertence or excusable neglect, or when a claim has matured or
been acquired subsequently, the arbitrators may permit amendment. A demand for
arbitration shall be made within a reasonable time after the claim has arisen,
and in no event shall it be made after the date when institution of legal or
equitable proceedings based on such claim would be barred by the applicable
statute of limitations.
14.4 The award rendered by the arbitrators shall be final,
binding and conclusive, and judgment may be entered upon it in accordance with
applicable law in the appropriate court in the State of Florida, with no right
of appeal therefrom.
14.5 Each party shall pay its or his own expenses of
arbitration, and the expenses of the arbitrators and the arbitration proceeding
shall be equally shared; provided, however, that, if, in the opinion of a
majority of the arbitrators, any claim or defense was unreasonable, the
arbitrators may assess, as part of their award, all or any part of the
arbitration expenses of the other party
(including reasonable attorneys' fees) and of the arbitrators and the
arbitration proceeding against the party raising such unreasonable claim or
defense.
15. ASSIGNMENT
This Agreement, as it relates to the employment of the
Executive, is a personal contract and the rights and interests of the Executive
hereunder may not be sold, transferred, assigned, pledged or hypothecated.
16. NOTICES
Any notice required or permitted to be given pursuant to this
Agreement shall be deemed to have been duly given when delivered by hand or sent
by certified or registered mail, return receipt requested and postage prepaid,
overnight mail or telecopier as follows:
If to the Executive:
000 Xxxxxxxxx Xxxx
Xxxxx Xxxxx Xxxxx, Xxxxxxx 00000
Telecopier: (000) 000-0000
If to the Company:
0000 Xxxxxxxx Xxxxxxx Xxxxx
Attention: Chairman of the Board
Telecopier Number: (000) 000-0000
with a copy to:
Certilman Balin Xxxxx & Xxxxx, LLP
00 Xxxxxxx Xxxxxx
Xxxx Xxxxxx, Xxx Xxxx ll554
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier Number: (000) 000-0000
or at such other address as any party shall designate by notice to the other
party given in accordance with this Paragraph 16.
17. GOVERNING LAW
This Agreement shall be governed by, and construed and enforced
in accordance with, the laws of the State of Florida applicable to agreements
made and to be performed entirely in Florida.
18. WAIVER OF BREACH; PARTIAL INVALIDITY
The waiver by either party of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach. If any provision, or part thereof, of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall attach only
to such provision or the part thereof and not in any way affect or render
invalid or unenforceable any other provisions of this Agreement, and this
Agreement shall be carried out as if such invalid or unenforceable provision, or
part thereof, had been reformed, and any court of competent jurisdiction or
arbiters, as the case may be, are authorized to so reform such invalid or
unenforceable provision, or part thereof, so that it would be valid, legal and
enforceable to the fullest extent permitted by applicable law.
19. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof. This Agreement supersedes all
prior agreements, understandings, negotiations and discussions, whether written
or oral, of the parties hereto relating to the transactions contemplated by this
Agreement. This Agreement may be amended only by a writing executed by the
parties hereto.
20. WAIVER OF JURY TRIAL. THE COMPANY AND THE EXECUTIVE ACKNOWLEDGE
THAT THE RIGHT TO A TRIAL BY JURY IS A CONSTITUTIONAL RIGHT, BUT THAT THE RIGHT
MAY BE WAIVED. THE COMPANY AND THE EXECUTIVE EACH KNOWINGLY, VOLUNTARILY,
IRREVOCABLY AND WITHOUT COERCION, WAIVE ALL RIGHTS TO TRIAL BY JURY OF ALL
DISPUTES BETWEEN THEM. NEITHER THE COMPANY NOR THE EXECUTIVE SHALL BE DEEMED TO
HAVE GIVEN UP THIS WAIVER OF JURY TRIAL UNLESS THE PARTY CLAIMING THAT THIS
WAIVER HAS BEEN RELINQUISHED HAS A WRITTEN INSTRUMENT SIGNED BY THE OTHER PARTY
STATING THAT THIS WAIVER HAS BEEN GIVEN UP. IN THE EVENT OF LITIGATION, A COPY
OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO TRIAL BY THE COURT.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year above written.
XXXXXXXX.XXX, INC.:
By: ________________________________________
XXXXX XXXXXXXX, CHIEF EXECUTIVE OFFICER
EXECUTIVE:
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XXXX XXXXXX
