EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is entered into as of the [__] day
of August, 2000 by and between Midcore Software Limited, a private limited
company organized under the laws of England and Wales (the "Company") and having
a registered office at Mid Day Court, 00-00 Xxxxxxxx Xxxx, Xxxxxx, Xxxxxx,
Xxxxxxx, and Xxxxx Xxxxxxxx-Xxxxxxx, an individual residing at Xxxxx Xxxx House
Cottage, 00 Xxxxx Xxxx Xxxx, Xxxxxx, Xxxxxx, XX00 0XX Xxxxxxx ("Employee").
W I T N E S S E T H:
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WHEREAS, Employee is a principal shareholder of Midcore Software
Incorporated ("Midcore"); and
WHEREAS, pursuant to a certain Agreement and Plan of Merger (the "Merger
Agreement") of even date herewith by and among NCT Group, Inc. ("NCT"), NCT
Midcore, Inc., a wholly-owned subsidiary of NCT ("NCT Midcore"), Midcore,
Employee and certain other individuals named therein, Midcore is merging with
and into NCT Midcore; and
WHEREAS, the Company is a wholly-owned subsidiary of NCT Midcore; and
WHEREAS, the Company desires to offer employment to Employee, and Employee
agrees to accept such offer of employment, under the terms and conditions
contained in this Agreement; and
WHEREAS, as a condition to Midcore entering into the Merger Agreement and
the consummation of the transactions contemplated thereby, Employee and Midcore
have required the Company to enter into this Agreement with Employee.
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT
The Company hereby employs Employee for the purpose of serving as its Vice
President of International Sales and Employee hereby accepts such employment
upon the terms and conditions hereinafter set forth.
2. DUTIES
Employee shall have, perform and discharge well and faithfully the duties
and powers reasonably appropriate to a Vice President of International Sales.
During the period of his employment relationship with the Company hereunder,
Employee shall devote all reasonable business efforts to the interests of the
Company and shall not engage in any action or activities detrimental to the best
interests of the Company.
3. TERM OF EMPLOYMENT
The initial term of this Agreement shall be for a period of three (3) years
commencing on the date of execution of this Agreement and ending on the third
anniversary of such date (the "Initial Term"); provided, however, that this
Agreement shall be automatically renewed for additional periods of one (1) year
after such date (each, a "Renewal Term") unless and until either Employee or the
Company notifies the other that he or it, as the case may be, elects to
terminate the Agreement as of the end of the Initial Term or the end of a
Renewal Term by providing written notice to the other not less than sixty (60)
days before the end of the Initial Term or the Renewal Term, as the case may be.
4. COMPENSATION AND BENEFITS
In consideration of Employee's services hereunder, Employee shall be
entitled to receive the compensation and benefits set forth in Schedule A
attached hereto.
5. TERMINATION OF EMPLOYMENT
(a) Termination Events. Notwithstanding any other provision of this Agreement,
the employment of Employee hereunder shall terminate under the following
circumstances:
(1) Employee's employment hereunder shall immediately and automatically
terminate upon Employee's death, effective as of the date of Employee's
death.
(2) The Company may terminate Employee's employment hereunder for Cause. For
purposes of this Agreement, "Cause" for termination shall mean only the
following:
(A) the willful failure by Employee to substantially perform his duties
hereunder (other than such failure as results from Employee's illness or
physical or mental infirmity), but only if such failure continues and is
not remedied by Employee within thirty (30) days of receipt by Employee of
written demand (a "Written Demand") by NCT's Board of Directors or C.E.O.,
which Written Demand specifically identifies the manner in which the
Company believes that Employee has failed to discharge said duties; or
(B) the willful failure by Employee to either:
(i) willfully devote substantially all of his full professional/business time
and attention to his duties hereunder; or
(ii) immediately cease engaging in gross misconduct materially injurious to the
Company and/or its affiliates;
but only, other than with respect to a failure under the foregoing clause
(ii), if such failure continues and is not remedied by Employee within
thirty (30) days of receipt by Employee of a Written Demand by NCT's Board
of Directors or C.E.O., which Written Demand specifically identifies the
manner in which the Company believes that Employee has failed to discharge
said duties;
(C) if Employee is adjudicated or pleads guilty to a crime involving moral
turpitude or the possession, use or sale of illegal or controlled
substances or other material that has or is likely to have a material
detrimental effect on the business or reputation of the Company; or
(D) if Employee engages in misappropriation, theft or conversion or in the
event of Employee's chronic drunkenness or drug addiction; or
(E) if Employee breaches or otherwise violates any of the provisions of Section
6 hereof; or
(F) if Employee willfully causes or directs the Company to commit a violation
of a law, rule or regulation where such violation could have a material
adverse effect on the Company, its financial condition, reputation or
prospects.
For purposes of this Section 5(a)(2), no act or failure to act on
Employee's part shall be considered "willful" unless done, or omitted to be
done, by Employee in bad faith or without Employee's reasonable belief that
his action or omission was in the best interests of the Company.
A termination for Cause shall be effective (i) if no curing period is
applicable, as of the date of Employee's receipt of written notice of the
Company's election to terminate Employee for Cause, which notice specifies
the particular act(s), or failure(s) to act, that constitute(s) the basis
for the Company's election to so terminate Employee, or (ii) if a curing
period is applicable and Employee has failed to cure within such curing
period, upon expiration of such curing period following Employee's receipt
of a Written Demand of NCT's Board of Directors or C.E.O.
(3) The Company may terminate Employee's employment hereunder by reason of
Employee's Disability. For purposes of this Agreement, the term
"Disability" shall mean the inability of Employee, due to illness or
physical or mental infirmity, to perform his duties under this Agreement to
the extent performed prior to such disability, for one or more periods
totaling 180 days during any twelve-month period and such illness or
physical or mental infirmity is expected to continue for the foreseeable
future. For purposes of this Agreement, "Disability" shall be determined in
the reasonable discretion of NCT's Board of Directors. A termination by
reason of Employee's Disability shall be effective thirty (30) days
following the delivery of written notice of the Company to Employee of the
Company's intention to terminate Employee's employment due to Employee's
Disability.
(4) Employee may terminate Employee's employment hereunder for "good reason" in
the event that:
(A) the Company materially restricts or curtails Employee's duties or
repeatedly assigns duties to Employee that are not consistent with the
duties performed by other senior executives of the Company; or
(B) the Company relocates its business office or requires Employee to relocate
his residence more than fifty (50) miles from Cobham, Surrey, Enlgand or
assigns Employee duties reasonably requiring such a relocation; or
(C) the Company otherwise materially breaches this Agreement.
A termination by Employee for good reason shall be effective thirty (30)
days following delivery of written notice by Employee to the Company of
Employee's election to terminate Employee's employment hereunder for good
reason, together with a statement setting forth in reasonable detail the
basis for such election, unless prior to the expiration of such thirty-day
period, the Company revokes the decision or direction which is the basis
for such election.
(b) Compensation Upon Termination.
(1) If Employee's employment hereunder is terminated by the Company for Cause
or by reason of Employee's Disability, or is terminated due to Employee's
death, then the Company shall be obligated to (A) pay to Employee (or
Employee's estate, as the case may be) at the rate of Employee's then
current Base Salary (as such term is defined in Schedule A) any accrued but
unpaid Base Salary through the effective date of Employee's termination
plus any accrued and unpaid Commissions(as defined in Schedule A) on
purchase order for products and services received prior to the effective
date of Employee's termination, (B) pay to Employee (or Employee's estate)
at the rate of Employee's then current Base Salary, any accrued but unpaid
paid vacation days through the effective date of Employee's termination,
and (C) subject to the provisions of Schedule A, reimburse Employee (or
Employee's estate) for any unreimbursed expenses incurred by Employee prior
to the effective date of termination.
(2) If Employee's employment hereunder is terminated by Employee for good
reason, the Company shall be obligated to (A) pay to Employee, in a single
lump sum, within 60 days of the effective date of such termination,
severance compensation ("Severance Compensation") in an amount equal to one
(1) year of Employee's Base Salary at the then current rate plus any
accrued and unpaid Commissions on purchase orders for products and services
received prior to the effective date of Employee's termination plus the
Draw (as defined in Schedule A) then in effect for the one year period
following effective of Employee's termination; (B) pay to Employee, at the
rate of Employee's then current Base Salary, any accrued but unpaid paid
vacation days through the effective date of Employee's termination as well
as any commission due on purchase orders which were received by the Company
prior to the effective date of Employee's termination plus the then
effective amount of the draw against commissions for the next 12 months,
and (C) subject to the provisions of Schedule A, reimburse Employee for any
unreimbursed expenses incurred by Employee prior to the effective date of
termination. Notwithstanding the provisions of the foregoing sentence, if
Employee's employment hereunder is terminated by Employee for good reason
and the Company, within fifteen (15) days of the date of such termination,
waives in writing all of the provisions of the non-competition covenant
contained in Section 6(d), then the Company shall be obligated to pay to
Employee an amount of Severance Compensation equal to six (6) months of
Employee's Base Salary at the then current rate. The Company acknowledges
and agrees that Employee shall have no duty to seek alternative employment
in the event of a termination for good reason and that no income, salary or
other compensation earned by Employee following a termination for good
reason during the remainder of what would have been the then current term
of this Agreement shall reduce the amounts payable to Employee under this
Section 5(b)(2).
6. CONFIDENTIALITY; DEVELOPMENTS; NON-COMPETITION
(a) Acknowledgments. Employee acknowledges that during the course of Employee's
previous employment and/or association with the Company as an executive,
consultant, advisor and/or employee of the Company, and any predecessor
thereto, Employee has had, and, during the course of Employee's employment
hereunder, Employee will have access to certain confidential information,
including, but not limited to, certain computer software, algorithms,
computer processing systems or techniques, business plans or prospects,
records, files, memoranda, reports, pricing information, customer and
supplier lists and the like, concerning either Midcore and its business or
the Company and its business, or disclosed to Midcore or the Company by
others under an obligation of Midcore or the Company to hold the same
confidential ("Confidential Information"); and Employee may have, during
the period of Employee's previous employment and/or association with the
Company as an executive, consultant, advisor and/or employee of the
Company, made, developed, invented or conceived of, and may, during the
period of his employment hereunder, make, develop, invent or conceive of
software programs, inventions, discoveries, concepts, ideas, techniques,
information, know-how and improvements (whether or not patentable or
registrable under copyright or otherwise subject to similar protections
under other, similar, laws) which related to or which were useful in, or
which relate to or which are useful in Midcore's or the Company's business,
some or all of which may have constituted or may constitute Confidential
Information, or which have resulted or result from the use of premises or
personal property (whether tangible or intangible) owned, leased or
contracted for by Midcore or the Company (collectively, "Developments").
(b) Confidentiality. Employee shall hold all Confidential Information as
property of the Company and hereby agrees to maintain Confidential
Information as confidential. At such time as Employee's employment by the
Company hereunder is terminated, Employee agrees to return to the Company,
at its request, all Confidential Information, including any material stored
on computer disks or tapes, in Employee's possession or control and to
destroy any computer entries or storage files relating thereto. Employee
hereby agrees that Employee will not, during the term of Employee's
employment with the Company or afterwards, use the Confidential Information
for Employee or for others (other than the Company), copy such information
or disclose it to any person or entity; provided, that after the
termination of Employee's employment with the Company, the foregoing
restrictions shall not apply to Confidential Information which, at the time
of its disclosure by Employee, is public knowledge through no action or
omission by Employee or on Employee's behalf and which has not been
disclosed to the public by any third party in violation of any obligation
to maintain its confidentiality.
(c) Developments Property of the Company. Employee hereby sells, assigns and
transfers to the Company (or to any person or entity designated by it) all
of his right, title and interest in and to any Developments. Employee shall
promptly disclose to the Company (or to any persons designated by it), in
such form as the Company reasonably requests, all information, details and
data pertaining to any Developments; and, whether during the term of
Employee's previous employment and/or association with the Company as an
executive, consultant, advisor and/or employee of the Company or during his
employment hereunder or thereafter, execute and deliver to the Company such
formal transfers and assignments and such other papers and documents as may
be required of him to permit the Company (or any person designated by it)
to patent any patentable Developments, to copyright any copyrightable
Developments, or to otherwise perfect its interest in such Developments.
(d) Non-Competition Covenant. During the term of Employee's employment with the
Company hereunder and, subject to due and punctual performance by the
Company of its payment obligations hereunder, for a period of one (1) year
after the termination of such employment, Employee shall not, other than on
behalf of the Company or its affiliates and except as a passive investor in
less than five percent (5%) of the securities of a publicly-held company,
directly or indirectly, own, manage, operate, control or participate in the
ownership, management, operation or control of, serve as an officer,
director, partner, employee, agent, consultant, advisor, developer or in
any similar capacity with, or have any financial interest in, or aid or
assist anyone else in, the conduct of, any business or business activity
related to the design, development or sale of internet gateway computer
software products competitive with the Company. Nothing contained in the
foregoing sentence is intended to, or shall limit Employee from becoming
associated with or employed by, during the one-year period following
termination of Employee's employment hereunder, any person or entity
engaged in a business competitive with the business of the Company to the
extent that Employee's responsibilities as an employee of such person or
entity are related only to the lines of business of such person or entity
which, standing alone, would not constitute a business competitive with the
business of the Company.
(e) Remedies. Employee recognizes and agrees that the Company will suffer
irreparable harm as a result of a breach by Employee of the provisions of
this Section 6 for which money damages would be inadequate. Accordingly, in
the event of any actual or threatened breach by Employee of any such
provisions, the Company shall, in addition to any other legal remedies
permitted by applicable law, be entitled to equitable remedies, including,
without limitation, specific performance, a temporary restraining order or
a permanent injunction, in any court of competent jurisdiction to prevent
or otherwise restrain a breach of such provisions without the necessity of
proving damages and to recover all costs and expenses, including, without
limitation, reasonable attorneys' fees, incurred in enforcing such
provisions. Such relief shall be in addition to and not in substitution for
any other remedies available to the Company hereunder.
7. MISCELLANEOUS
(a) Notice. Any notice, request, instruction or other communication to be given
hereunder by any party to another shall be given by hand delivery,
telecopier (receipt confirmed), certified or registered mail (return
receipt requested) or by overnight express service addressed to the
respective party or parties at the addresses set forth on the first page
hereof or to such other address or addresses (or telecopier number(s)) as
either party may designate to the other by like notice as hereinabove set
forth. Any notice given hereunder shall be deemed given and received on the
date of hand delivery or telecopy transmission, or one (1) day after
delivery to an overnight express service for next-day delivery, as the case
may be.
(b) Successors and Assigns. This Agreement inures to the benefit of the
successors and assigns of the Company and is binding upon Employee's heirs
and legal representatives. Employee shall not assign any of Employee's
rights or obligations hereunder without the prior written consent of the
Company, which consent shall not be unreasonably withheld.
(c) Severability of Agreement. The Company and Employee agree that the
provisions of this Agreement are severable and separate and that the
unenforceability of any specific provision shall not affect the validity of
any other provision hereof.
(d) Entire Agreement. This instrument contains the entire agreement of the
parties. It may be changed only by an agreement in writing signed by a
party against whom enforcement of any waiver, change modification,
extension or discharge is sought.
IN WITNESS WHEREOF, the parties have each executed this Agreement as of the
date first written above.
Midcore Software Limited
By:
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Name:
Title:
Xxxxx Xxxxxxxx-Xxxxxxx
Schedule A
Base Salary. Employee shall be paid an annual salary of not less than
U.S.$80,000 payable in accordance with the Company's payroll policy as in effect
from time to time ("Base Salary"). Such Base Salary shall be subject to cost of
living increases on an annual basis and shall be subject to merit increases from
time to time as may be determined in the discretion of the Board of Directors of
NCT.
Commissions. Primary commission of 5% of the face amount of purchase orders for
the Company's or its affiliates' products or services originated by Employee
during the term of the Agreement. Override commission (together with primary
commissions, the "Commissions") of 1% of purchase orders for the Company's or
its affiliate's products or services originated by any sales personnel
supervised or managed by Employee. Commissions will be paid monthly with a draw
(the "Draw") against Commissions shall be U.S.$ 30,000 paid in monthly
installments. If Commissions earned during the first year or any subsequent year
are less than $30,000, no refund or carry forward of the Draw will be due or
payable but the Company may in such event reduce or eliminate the Draw for the
following one year period.
Stock Options. At the first meeting of the Board of Directors of NCT following
the execution of this Agreement, Employee shall be awarded stock options to
purchase shares of common stock, $0.01 par value per share, of NCT. All options
shall (i) be evidenced by an option agreement, (ii) be granted pursuant to, and
subject to the terms and provisions of, NCT's stock option plan then in effect
and (iii) have a term of ten (10) years. The exercise price for all such options
shall be the fair market value of NCT Shares on the respective date of grant.
All such options shall vest annually over a four (4) year period with twenty
percent (20%) deemed vested on the date of grant, and an additional twenty
percent (20%) to vest, subject to continued employment by Employee with the
Company or an affiliate thereof, on each of the four (4) subsequent
anniversaries of the date hereof; provided, however, that all unvested options
shall vest immediately if more than fifty percent (50%) of the Company's, NCT's
and its affiliates' assets or business or more than fifty percent (50%) of the
Company's or NCT's stock are purchased or acquired (including by virtue of a
merger, consolidation, reorganization or similar transaction) by any person or
entity in a single transaction or series of related transactions.
Benefits.
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o Automobile allowance of U.S.$8,000 per year to lease a car.
o Employer pension contribution of 10% of base salary.
o Standard life insurance benefit of 2 times annual salary.
o Employee shall be entitled to participate in any and all other employee
benefit plans or programs of the Company and NCT including, without
limitation, health and disability insurance from time to time in effect and
which are made available to senior executives (the "Plans"), subject to the
terms of the applicable Plan documents. For purposes of determining
Employee's eligibility to participate in and the amount of benefits for
which Employee is eligible with respect to any such Plans, Employee shall
be credited for his three (3) years of service as a full-time employee of
the Company.
Reimbursement of Expenses. Employee shall be entitled to reimbursement of all
reasonable expenses incurred by him in connection with the performance of his
duties hereunder, subject to the presenting of appropriate supporting materials
in accordance with the Company's policies regarding such matters as in effect
form time to time.
Vacation; Sick Leave; Holidays. Employee shall be entitled to vacation with pay
in accordance with the policies of the Company for its senior executive
officers, such vacation to be taken at such times and intervals as shall be
mutually agreed by Employee and the Company. Employee shall also be entitled to
paid legal holidays and paid sick leave in accordance with the policies of the
Company for its senior executive officers.
