EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") by and between COMPU-XXXX,
INC., a Delaware corporation with offices at 00 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx
Xxxx 00000 ("Company"), and XXXXX XXXXX, residing at 000 Xxxxxxxxxx Xxxx,
Xxxxxxxx, Xxx Xxxx 00000 ("Executive") is made and entered as of January 6,
1997, ("Effective Date").
RECITALS
WHEREAS on January 6, 1997 Executive became Chief Technology Officer
and a Director of the Company;
WHEREAS commencing January 6, 1997, Executive agrees to devote no less
than two (2) full business days per week as a consultant to the Company and
further agrees to increase the number of days per week devoted to the Company
until March 10, 1997 (the "Per Diem Period"); at which time he will assume his
responsibilities as a full-time employee of the Company pursuant to the terms of
this Agreement.
WHEREAS the Company has agreed to compensate the Executive at the rate
of $850.00 per day (the "Per Diem Rate") during the Per Diem Period until the
Executive assumes his roles as a full-time employee of the Company pursuant to
the terms of this Agreement;
WHEREAS the parties have agreed that compensation to the Executive
during the Per Diem Period is limited to the Per Diem Rate and that the
Executive shall not be entitled to any other benefits as a full-time employee
pursuant to the terms hereof during the Per Diem Period; and
WHEREAS the parties have agreed that it is in their mutual best
interests to enter into this agreement with respect to the full-time employment
of the Executive.
NOW THEREFORE, in consideration of the premises and of the respective
covenants and agreements contained herein, the parties hereto agree as follows:
1.1 Retention. The Company hereby retains the Executive as Chief
Technology Officer of the Company for and during the term hereof. The Executive
hereby accepts employment under the terms and conditions set forth in this
Agreement.
1.2 Duties of Executive. The Executive shall perform in the capacity
described in Section 1.1 hereof and shall have such duties, responsibilities,
and authorities as are designated for such offices pursuant to the Bylaws, as
amended, of the Company, and as may be reasonably assigned to him from time to
time by the Chief Executive Officer of the Company. The Executive agrees to
devote his full time during normal business hours, best efforts,
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abilities, knowledge and experience to the faithful performance of the duties,
responsibilities, and authorities which may be reasonably assigned to him and
which are consistent with his executive offices under Section 1.1 of this
Agreement. The Executive shall be free to devote up to one (1) day per work week
which day may vary from week to week to other business including but not limited
to providing consulting services to General Electric Corporation, Xxxxxx
Telecommunications, Inc., and the Federal Communications Commission provided the
Executive shall use his best efforts to pursue such activities in such a manner
so that such activities shall not prevent the Executive from fulfilling his
obligations to the Company hereunder, and provided further, the Executive shall
resolve any conflict between his obligations to the Company and his obligations
to any other entity in favor of the Company. Notwithstanding the preceding, the
Executive may, without being in violation of his obligations hereunder, (i)
serve on corporate, civic or charitable boards or committees which are not
engaged in business in the computer software, radio or telecommunications
industries, with the exceptions of Xxxxxx Telecommunications L.L.C. and CarComm
L.L.C., provided, however, the Executive may serve on boards or committees
otherwise prohibited hereunder or director of a trade or business association
related to the computer software, radio or telecommunications industries,
provided, however, that with the prior written consent of the Chief Executive
Officer, Employee may serve on Boards or committees otherwise prohibited
hereunder, (ii) invest the Executive's personal assets in such form or manner as
will not require any material services by the Executive in the operation of the
entities in which such investments are made, provided the Executive shall use
his best efforts to pursue such activities in such a manner so that such
activities shall not prevent the Executive from fulfilling his obligations to
the Company hereunder, and provided further, the Executive shall resolve any
conflict between his obligations to the Company and his obligations to any other
entity in which the Executive has a financial interest in favor of the Company.
To the extent such conflict exists and is resolved in favor of the Company, the
Company agrees to replace all reasonable and provable financial losses sustained
by the Executive as a result of such conflict, and in any event this amount is
not to exceed $100,000.
1.3 Term. This Agreement shall become effective as of the Effective
Date and shall continue in force and effect until December 31, 1999, unless
sooner terminated as provided in Section 1.6 hereof. This Agreement shall
automatically renew for additional one (1) year periods unless either party has
given at least sixty (60) days prior written notice of their intention not to
renew.
1.4 Compensation. The Company shall pay the Executive, as full
compensation for services rendered by the Executive under the Agreement, as
follows:
(a) Base Salary. The Company shall pay the Executive a base
salary of TWO HUNDRED THOUSAND DOLLARS ($200,000.00) per year for the year ended
March 10, 1998 at the rate of $3,846.16 per week; and TWO HUNDRED TWENTY FIVE
THOUSAND ($225,000.00) DOLLARS per year for the year ended March 10, 1999 at the
rate of $4,326.93 per week; and the equivalent per annum salary of TWO HUNDRED
AND FIFTY
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THOUSAND ($250,000) DOLLARS for the eight month period ending December 31, 1999
at the rate of $4,807.70 per week, or such higher salary as may be determined
from time to time during the term hereof either in accordance with the
provisions of Section 1.4(b) hereof or by the Board of Directors in its sole
discretion, prorated for any partial period of employment ("Salary"). Such
Salary shall be paid by the Company to the Executive in twenty-six (26) equal
installments in accordance with the regular payroll payment dates of the Company
or in such installments and on such days during the month as the Company and the
Executive shall mutually determine. In the event this agreement renews
automatically as provided in paragraph 1.2 hereof increases in base salary will
be a minimum of the cumulative annual average increase for the prior year as
stated in the consumer price index all urban consumers New York - Northern New
Jersey - Long Island - Metropolitan Area publicized by the U.S. Department of
Commerce. If such index is terminated or no longer in existence use of a
comparable index will be accepted.
(b) Annual Bonus Based on Earnings (Pre-tax Earnings) In
addition to the Salary set forth in Section 1.4(a) hereof, the Executive shall
receive a bonus each year during the term of this Agreement in an amount equal
to a varying percentages of the pre-tax consolidated taxable income of the
Company and its subsidiaries ("Pre-Tax Earnings") for the preceding taxable year
ended December 31 (or such other fiscal year as the Company may adopt inthe
future), commencing with the taxable year ending December 1, 1997 as determined
by the Company's independent accountant in accordance with generally accepted
accounting principles (except as hereinafter set forth) prorated for any partial
period of employment ("Earnings Annual Bonus"). The Earnings Annual Bonus
payable to the Executive shall be the amount determined by multiplying the
PRE-TAX EARNINGS of the Company as determined above by the applicable percentage
based upon PRE-TAX EARNINGS of the Company as set forth in the table below,
prorated for any partial period of employment:
PRE-TAX EARNINGS Earnings Annual Bonus
Less than $500,000 None
$500,000 or more but 2.0% of the PRE-TAX EARNINGS
less than $1,000,000 of the Company
$1,000,000 or more but 3.0% of the PRE-TAX EARNINGS
less than $1,500,000 of the Company
$1,500,000 or more 4.0% of the PRE-TAX EARNINGS
of the Company
For example, if the Executive worked a full twelve months during the employment
year and the PRE-TAX EARNINGS of the Company for the preceding year ended
December
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31 was either: $100,000, $500,000, $800,000, $1,200,000 or 1,700,000, then the
Earnings Annual Bonus due the Executive would be $0, $10,000 ($500,000 x 2%),
$16,000 ($800,000 x 2%), and $36,000 ($1,200,000 x 3%), and $68,000 (1,700,000 x
4%) respectively. Such Earnings Annual Bonus, shall be paid to the Executive
within ninety (90) days after the end of the taxable year of the Company for
which the Executive is entitled to receive the Earnings Annual Bonus.
(c) Discretionary Bonus Compensation. In addition to the
Earnings Annual Bonus set forth in Section 1.4(b) hereof, the Company may also
pay the Executive discretionary annual bonus compensation ("Discretionary Bonus
Compensation") in an amount determined by the Board of Directors of the Company
(excluding the Executive) in its sole discretion to be proper and appropriate
based upon such factors as the Board of Directors deems appropriate including
(i) the Executive's contributions to the design, engineering and development of
software, radio frequency and data communications solutions (ii) the
consolidated revenues of the Company and its subsidiaries for the taxable year,
and (iii) the general overall performance of the Company and its subsidiaries
for the taxable year. Such Discretionary Bonus Compensation shall be paid by the
Company to the Executive in the manner set forth in the resolution of the Board
of Directors of the Company authorizing and declaring the payment of such
Discretionary Bonus Compensation to the Executive ("Discretionary Bonus
Resolution"). Notwithstanding anything herein to the contrary, the Executive
shall not be entitled to any Discretionary Bonus Compensation for any Employment
Year during the term of this Agreement unless and until such Discretionary Bonus
Compensation is determined and declared by the Board of Directors of the
Company.
1.5 Employment Benefits. In addition to the Salary, the Earnings Annual
Bonus, and any Discretionary Bonus Compensation payable to the Executive
hereunder, the Executive shall be entitled to the following benefits upon
satisfaction by the Executive of the eligibility requirements therefor, subject
to the following limitations:
(a) Sick Leave Benefits and Disability Insurance. Unless this
Agreement is terminated pursuant to the provisions of Section 1.6(b) hereof and
provided that Executive has been employed on a full time basis for a minimum of
three (3) months, the Executive shall be paid sick leave benefits for a period
of up to three (3) months at his then prevailing Salary rate during his absence
due to illness or other incapacity, reduced by the amount, if any, of worker's
compensation, social security entitlement, or disability benefits, if any, under
the Company's group disability insurance plan, if any.
(b) Life Insurance;" Key Man" Life Insurance. The Company, at
its own expense, shall provide the Executive, subject to the Executive passing
any physical examination required by the Company's insurance company, life
insurance benefits under and consistent with any group term life insurance plan
which the Company, at its election, may adopt. Any such life insurance coverage
shall be upon terms and conditions comparable
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to the coverage, if any, provided other executive officers of the Company, and
provided further, however, that the Company shall not be obligated to incur a
premium of more than $1,000 per year for any such coverage. In addition, the
Company may obtain "key man" life insurance upon the life of the Executive in an
amount determined by the Company in its sole discretion. The Executive shall
fully cooperate in obtaining said life insurance, including submitting to any
physical examination.
(c) Hospitalization, Accident, Major Medical and Dental
Insurance. The Company, at its own expense, shall provide the Executive (and all
dependents of the Executive at the request of the Executive) with group
hospitalization, group accident, major medical, and dental insurance in amounts
of coverage comparable to the coverage, if any, provided other executive
officers of the Company.
(d) Vacations. The Executive shall be entitled to a reasonable
paid vacation of not less that ten (10) business days each year during the term
of this Agreement, exclusive of national and religious holidays and weekends,
which vacation shall be taken by the Executive in accordance with the business
requirements of the Company at the time and its personnel policies then in
effect relative to this subject.
(e) Working Facilities. During the term of this Agreement, the
Company shall provide at its expense, adequate office space, furniture,
equipment, supplies, and personnel (including professional, clerical, support
and other personnel) as shall be suitable in the opinion of the Chief Executive
Officer of the Company to the Executive's position and adequate for the
Executive's use in performing his duties and responsibilities under this
Agreement.
(f) Automobile Allowance. During the term of this Agreement,
the Company shall provide the Executive with a monthly automobile allowance of
SEVEN HUNDRED AND FIFTY DOLLARS ($750.00). Any allowance due the Executive
pursuant to the preceding provisions of this paragraph shall be paid by the
Company concurrently with payroll.
(g) Signing Bonus Incentive Stock Options. Upon signing this
Agreement in connection with the Executive becoming Chief Technology Officer
and a Director of the Company, the Company shall grant to the Executive
qualified stock options, in accordance with the terms and conditions of the
Company's 1996 Stock Option Plan and Agreement, to purchase (1) 50,000 shares of
common stock of the Company at an exercise price of $2.00 per share below the
public offering price of the common stock in the Initial Public Offering, and
(2) an additional 50,000 shares of common stock at an exercise price equal to
the average trading price of the Company's common stock on the day prior to
the grant as reflected in the National Association of Securities Dealers
Automated Quotation System between now and March 10, 1998, provided however that
the Executive must serve as an officer of the Company, a full-time employee and
on the Board of Directors at the time of exercise. Such
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options shall vest ratably over a three (3) year period, and shall be
exercisable for a period of ten (10) years thereafter.
(h) Future Minimum Incentive Stock Options. With respect to
each of the Company's fiscal year (commencing December 31, 1998), the Company
shall grant the Executive incentive stock options, in accordance with the terms
and conditions of the Company~s 1996 Stock Option Plan and Agreement effective
as of December 31 of that year, to the extent permissible under incentive stock
option plans maintained by the Company, to purchase 1000 shares of common stock
of the Company for each full $100,000 of the PRE-TAX EARNINGS of the Company and
its subsidiaries for such fiscal year as determined by the Company's independent
accountant in accordance with generally accepted accounting principles. The
number of shares of common stock covered by the incentive stock options to be
granted to the Executive pursuant to this paragraph, and the exercise price per
share thereof, shall be proportionately adjusted for any increase or decrease in
the number of issued shares of common stock of the Company resulting from a
subdivision or consolidation of shares or the payment of a stock dividend (but
only on the common stock) or any other increase or decrease in the number of
shares affected without receipt of consideration by the Company. Notwithstanding
the preceding, nothing contained herein shall preclude the Board of Directors of
the Company from terminating one or more incentive stock option plans currently
or hereafter maintained by the Company or issuing additional incentive stock
options to the Executive in its discretion. In the event the Company determines
to discontinue one or more incentive stock options plan and does not replace
said plan by a substantially similar plan than immediately prior to the
termination date of the plan the Company shall issue to the Executive the
options to which he is then entitled.
1.6 Termination. This Agreement and the Executive's employment
hereunder may be terminated without any breach of this Agreement at any time
during the term hereof only by reason of and in accordance with the following
provisions:
(a) Death. If the Executive dies during the term of this
Agreement and while in the employ of the Company, this Agreement shall
automatically terminate as of the date of the Executive's death, and the Company
shall have no further liability hereunder to the Executive or his estate except
to the extent set forth in Section 1.7(a) hereof.
(b) Disability. If, during the term of this Agreement, the
Executive shall be prevented from performing his duties hereunder by reason of
becoming totally disabled as hereinafter defined for six (6) months out of
twelve (12) month period, then the Company may terminate this Agreement
immediately upon written notice to the Executive without any further liability
hereunder to the Executive except as set forth in Section 1.7(b) hereof. For
purposes of this Agreement, the Executive shall be deemed to have become
disabled when (i) he either receives "disability benefits" under (a) Social
Security, or (b) the Companys disability plan, if any (whether funded with
insurance or
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self-funded by the Company), or (ii) the Board of Directors of the Company, upon
the written report of a qualified physician (after complete examination of the
Executive) designated by the Board of Directors of the Company or its insurers,
shall have determined that the Executive has become physically and/or mentally
incapable of performing his duties under this Agreement.
(c) Termination by the Company for Cause. Prior to the
expiration of the term of this Agreement, the Company may discharge the
Executive for cause and terminate this Agreement immediately upon written notice
to the Executive without any further liability hereunder to the Executive or his
estate, except to the extent set forth in Section 1.7(c) hereof. For purposes of
this Agreement, a "discharge for cause" shall mean termination of the Executive
upon written notice to the Executive limited, however, to one or more of the
following reasons:
(1) Misappropriation or embezzlement by the Executive
in connection with the Company as determined by the affirmative unanimous vote
of the Board of Directors of the Company other than the Executive;
(2) Mismanagement or neglect of the Executive's duties
as determined by the affirmative unanimous vote of the Board of Directors of
the Company (other than the Executive) after notice to the Executive of
the particular details thereof and a period of thirty (30) days thereafter
within which to cure such act or acts of mismanagement or neglect, and the
failure of the Executive to cure such act or acts within such thirty (30) day
period;
(3) Indictment and convicted felony; or
(4) Willful and unauthorized disclosure of Trade
Secrets (as defined in Section 1.8 hereof) of the Company as determined by the
affirmative unanimous vote of the Board of Directors of the Company, other
than the Executives.
(d) Termination by the Company with Notice. The Company may
terminate this Agreement, for a reason other than as set forth in subparagraphs
(a), (b), (c) or (g) of this Section 1.6 at any time immediately upon written
notice to the Executive without any further liability hereunder to the Executive
except to the extent set forth in Section 1.7(d) hereof.
(e) Termination by the Executive with Notice. The Executive
may terminate this Agreement without liability to the Company arising solely
from the resignation of the Executive at any time upon thirty (30) days written
notice to the Company in which event the Company shall have no further liability
hereunder to the Executive except to the extent set forth in Section 1.7(e)
hereof.
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(f) Termination by the Executive for Good Reason. The
Executive may terminate this Agreement at any time for Good Reason (as
hereinafter defined) in which event the Company shall have no further liability
hereunder to the Executive except to the extent set forth in Section 1.7(f)
hereof. For purposes of this Agreement, the term "Good Reason" shall mean,
without the Executive's express written consent, the occurrence of any the
following circumstances (which changes shall constitute a "Change"):
(1) The assignment to the Executive of any duties
inconsistent in any material respect (unless in the nature of a promotion) with
the Executive's position in the Company immediately prior to such Change
(including, but not limited to, the Executive's status, offices and titles),
or a significant adverse alteration or diminution in the nature or status of the
Executive's authority, duties or responsibilities from those in effect
immediately prior to such Change, other than an isolated, insubstantial and
inadvertent action that is fully corrected within thirty (30) days after receipt
of written notice from the Executive;
(2) Any material failure by the Company to comply
with any of the provisions of Section 1.4 or 1.5 of this Agreement, other
than an isolated, insubstantial and inadvertent action that is fully corrected
within thirty (30) days after receipt of written notice from the Executive;
(3) The Company's requiring the Executive to be
based anywhere other than within a reasonable travel distance from Cedarhurst,
New York, except for travel reasonably required of the Executive in the
performance of the Executive's duties on behalf of the Company;
(4) The failure of the Company to obtain an agreement,
satisfactory to the Executive, from any and all successors to assume and
agree to perform this Agreement, as contemplated in Section 1.9 hereof; or
(5) Any failure by the Company to comply with any
material provision of this Agreement that has not been cured within thirty (30)
days after notice of such noncompliance has been given by the Executive to the
Company.
During a period of six (6) months immediately following any
such termination of this Agreement by the Executive, the Executive agrees to
provide such consulting services to the Company as it may reasonably request, at
such time or times within such period as may be mutually agreed upon between the
Company and the Executive. The Executive shall be compensated for any such
consulting services at a daily rate equal to one thirtieth (1/30) of the monthly
Salary paid to the Executive at the time of the Executive's resignation from the
Company, plus reimbursement for any reasonable out-of-pocket expenses incurred
by the Executive in rendering such consulting services.
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(g) Termination upon Change in Control. The Company may
terminate this Agreement 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 1.7(g) hereof. For purposes of this Agreement, the
terms "Change of Control" shall mean:
(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 the
Company'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 the
Company's then outstanding voting securities entitled to vote generally in the
election of directors;
(2) Approval by the shareholders of the Company of
a merger or consolidation, with respect to which persons who were the
shareholders of the Company 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 results 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 the Company and any new
director or directors whose election by the Board 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
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said change to the directorship of the Company.
1.7 Compensation upon Termination.
(a) Death. In the event the Executive's employment hereunder
is terminated pursuant to the provisions of Section 1.6 (a) hereof due to the
death of the Executive, the Company shall have no further obligation to the
Executive or his estate, except to pay to the Executive's spouse, or if he
leaves no spouse, to the estate of the Executive (provided, however, that the
Executive, with the written consent of the Executive's spouse, if any, may
affirmatively designate a beneficiary other than his spouse or estate): (i) any
accrued, but unpaid, Salary, any authorized but unreimbursed business expenses,
and any vacation or sick leave benefits, which have accrued as of the date of
death, but were then unpaid or unused, (ii) any accrued, but unpaid, Earnings
Annual Bonus and any declared, but unpaid, Discretionary Bonus Compensation,
but without accelerating the bonus payment date, (iii) accrued stock options
pursuant to paragraph 1.4 (h), (iv) an amount equal to the difference between
(a) the full monthly Salary payable hereunder as of the date of death of the
Executive for a period consisting of that number of months equal to one (1)
month multiplied by the number of full years that the Executive was an employee
of the Company or a subsidiary or a predecessor in interest thereof, and (b) the
monthly payment, if any, payable to the Executive under the Company's salary
continuation plan, if any, for the corresponding month during the period set
forth in clause (iv)(a) above. Any amount due the Executive under clause (i)
of this paragraph shall be paid in a lump sum in cash within thirty (30) days
after the death of the Executive, any amount due the Executive under clause
(ii) of this paragraph shall be paid in accordance with the Discretionary
Bonus Resolution; provided, however, that any unpaid Earnings Annual Bonus
shall be paid to the Executive within thirty (30) days after the audited
financial statements for the fiscal year is made available by the Company's
auditors for which such Earnings Annual Bonus is due, and any amount due the
Executive under clause (iii) of this Paragraph shall be paid in accordance
with the Company's regular payroll periods during the period set forth in said
clause (iii).
(b) Disability. In the event the Executive's employment
hereunder is terminated pursuant to the provisions of Section 1.6(b) hereof due
to the Disability of the Executive, the Company shall be relieved of all of its
obligations under this Agreement, except to pay the Executive (i) any accrued,
but unpaid Salary, any authorized but unreimbursed business expenses, and any
vacation or sick leave benefits which have accrued as of the date on which such
permanent disability is determined, but then remain unpaid, (ii) any accrued,
but unpaid, Earnings Annual Bonus, and any declared, but unpaid, Discretionary
Bonus Compensation but without accelerating the bonus payment date, and (iii) an
amount equal to the difference between (a) the full monthly Salary payable
hereunder as of the date of termination of the Executive's employment hereunder
for a period consisting of that number of months equal to one (1) month
multiplied by the number of full years that the Executive was an employee of the
Company or a subsidiary or predecessor in interest thereof, and subject to a
minimum of three (3) months (b) the monthly payment, if any, payable to the
Executive
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under the Company's salary continuation plan and/or disability plan, if any,
for the corresponding month during the period set forth in clause (iii)(a)
above. The provisions of the preceding sentence shall not affect the Executive's
rights to receive payments under the Company's disability insurance plan, if
any. Any amount due the Executive under clause (i) of this paragraph shall be
paid in a lump sum in cash within thirty (30) days after the termination of the
Executives employment hereunder, any amount due the Executive under clause (ii)
of this paragraph shall be paid in accordance with the Discretionary Bonus
Resolution; provided, however, that any unpaid Earnings Annual Bonus shall be
paid to the Executive within thirty (30) days after the issuance of the
Company's fiscal year audited financial results for which such Earnings Annual
Bonus is due, and any amount due the Executive under clause (iii) of this
paragraph shall be paid in accordance with the Company's regular payroll periods
during the period set forth in clause (iii).
(c) Cause. In the event the Executive's employment hereunder
is terminated by the Company for Cause pursuant to the provisions of Section
1.6(c) hereof, the Company shall have no further obligation to the Executive
under this Agreement except to pay the Executive (i) any accrued, but unpaid,
Salary, any authorized but unreimbursed business expenses, and any vacation or
sick leave benefits, which have accrued as of the date of termination of this
Agreement, but were then unpaid or unused, and (ii) any accrued, but unpaid,
Earnings Annual Bonus, and any declared, but unpaid, Discretionary Bonus
Compensation, but without accelerating the bonus payment date. Any amount due
the Executive under clause (i) 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, and any amount due the Executive under clause (ii) of this Paragraph
shall be paid in accordance with the Discretionary Bonus Resolution; provided,
however, that any unpaid Earnings Annual Bonus shall be paid to the Executive
within thirty (30) days after the end of the Company's taxable year for which
such Earnings Annual Bonus is due.
(d) Termination by the Company with Notice. In the event the
Executive's employment hereunder is terminated by the Company pursuant to the
provisions of Section 1.6(d) hereof, the Executive shall be entitled to receive
(i) any accrued, but unpaid, Salary, 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, (ii) any
accrued, but unpaid, Earnings Annual Bonus and any declared, but unpaid,
Discretionary Bonus Compensation, and (iii) the full monthly Salary payable
hereunder for the unexpired term of the Agreement subject to mitigation in the
event the Executive has sought or obtained employment elsewhere after the
termination of the Executive's employment pursuant to the provisions of section
1.6(d) hereof. Any amount due the Executive under clauses (i), (ii) and (iii) of
this paragraph (other than for any Earnings Annual Bonus) shall be paid in a
lump sum in cash within thirty (30) days after the termination of the
Executive's employment thereunder; provided, however, that any unpaid Earnings
Annual Bonus shall be paid to the Executive within ninety (90) days after the
end of the Company's taxable year for which such Earnings Annual Bonus is due.
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(e) Termination by the Executive with Notice. In the event the
Executive's employment hereunder is terminated by the Executive pursuant to the
provisions of Section 1.6(e) hereof, the Executive shall be entitled to receive
(i) any accrued, but unpaid, Salary, any authorized but unreimbursed business
expenses, and any vacation or sick leave benefits which have accrued as of the
date of termination of this Agreement, but were then unpaid or unused, and (ii)
any accrued, but unpaid, Earnings Annual Bonus, and any declared, but unpaid,
Discretionary Bonus Compensation. Any amount due the Executive under clause (i)
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, and any amount
due the Executive under clause (ii) of this paragraph shall be paid in
accordance with the Discretionary Bonus Resolution; provided, however, that any
unpaid Earnings Annual Bonus shall be paid to the Executive within ninety (90)
days after the end of the Company's taxable year for which such Earnings Annual
Bonus is due. In addition, the Company may, at its option, cancel the
Executive's unexercised stock options and terminate Executive's unexercised
stock options.
(f) Termination by the Executive for Good Reason.
(1) Prior to Change of Control. In the event this
Agreement is terminated by the Executive pursuant to the provisions of Section
1.6(f) hereof prior to the occurrence of a Change of Control, the Executive
shall be entitled to receive (i) any accrued, but unpaid, Salary, 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, (ii) any accrued, but unpaid, Earnings Annual Bonus,
and any declared, but unpaid, Discretionary Bonus Compensation, and (iii)an
amount equal to One Hundred (100%) percent of the full monthly Salary payable
hereunder for the unexpired term of the Agreement whether or not the Executive
has sought or obtained employment elsewhere after the termination of the
Executive's employment. Any amount due the Executive under clauses (i), (ii) and
(iii) of this paragraph (other than for any Earnings Annual Bonus) shall be paid
in a lump sum in cash within thirty (30) days after the termination of the
Executive's employment hereunder; provided, however, that any unpaid Earnings
Annual Bonus shall be paid to the Executive within ninety (90) days after the
end of the Company's taxable year for which such Earnings Annual Bonus is due.
In addition, in the event this Agreement is terminated by the Executive pursuant
to the provisions of Section 1.6(f) hereof prior to the occurrence of a Change
of Control, the Company at its expense shall continue to provide the Executive
with the benefits set forth in Section 1.5(b), 1.5(c) 1.5(f) and 1.5(h) above
for the unexpired term of this 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 Section 1.6(f) hereof; provided,
however, if the Executive obtains employment elsewhere during the aforesaid
period, then the Company shall continue to provide the benefits set forth in
Sections 1.5(b), 1.5(c), 1.5(f) and 1.5(h) hereof only to the extent the
Executive does not receive such benefits in their entirety from the Executive's
then current employer.
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(2) After Change of Control. In the event this Agreement
is terminated by the Executive pursuant to the provisions of Section 1.6(f)
hereof after the occurrence of a Change of Control, the executive shall be
entitled to receive (i)any accrued, but unpaid, salary, 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, (ii) any accrued, but unpaid, Earnings Annual Bonus, and any
declared, but unpaid, Discretionary Bonus Compensation and (iii) an amount equal
to One Hundred (100%) percent of the full monthly Salary payable hereunder
for the unexpired term 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 section 1.6(f) hereof. Any amount due
the Executive under clauses (i), (ii) and (iii) of this paragraph (other than
for any Earnings Annual Bonus) shall be paid in a lump sum in cash within thirty
(30) days after the termination of the Executive's employment hereunder;
provided, however, than any unpaid Earnings Annual Bonus and shall be paid to
the Executive within ninety (90) days after the end of the Company's taxable
year for which such Earnings Annual Bonus is due. In addition, in the event this
Agreement is terminated by the Executive pursuant to the provisions of Section
1.6(f) hereof after the occurrence of a Change of Control, the Company at its
expense shall continue to provide the Executive with the benefits set forth in
Section 1.5(b), 1.5(c), 1.5 (f) and 1.5(h) above for the unexpired term 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
Sections 1.5(b), 1.5(c), 1.5(f) and 1.5(h) hereof only to the extent the
Executive does not receive such benefits in their entirety from the Executive's
current employer.
(g) Termination by the Company After Change of Control. In the
event this Agreement is terminated by the Company pursuant to the provisions of
Section 1.6(g) hereof after the occurrence of a Change of Control, the Executive
shall be entitled to receive (i) any accrued, but unpaid, Salary, 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, (ii) any accrued, but unpaid, Earnings Annual Bonus, and any
declared, but unpaid, Discretionary Bonus compensation, and (iii) an amount
equal to One Hundred (100%) percent of the full monthly Salary payable hereunder
for the unexpired term 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 Section 1.6 (g) hereof. Any amount due
the Executive under clauses (i) and (ii) 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, and any amount due the Executive under clause
(iii) of this paragraph shall be paid in a lump sum in cash within ninety (90)
days after the termination of the Executive's employment hereunder. In addition,
in the event this Agreement is terminated by the Company pursuant to the
provisions of Section 1.6(g) hereof after the occurrence of a Change of Control,
the Company at its expense shall continue to provide the Executive with the
benefits set forth in Sections 1.5(b), 1.5(c), 1.5(f) and 1.5(h) above for the
unexpired term of this Agreement whether or not the Executive has sought or
obtained
13
employment elsewhere after the termination of the Executive's employment
pursuant to the provisions of Section 1.6(g) hereof; provided, however, if the
Executive obtains employment elsewhere during the aforesaid period, then the
Company shall continue to provide the benefits set forth in Sections 1.5(b),
1.5(c), 1.5 (f) and 1.5(h) hereof only to the extent the Executive does not
receive such benefits in their entirety from the Executive's then current
employer.
(h) Termination of Obligations of the Company Upon Payment of
Compensation. Upon payment of the amount, if any, due the Executive pursuant to
the preceding provisions of this Section, the Company shall have no further
obligation to the Executive under this Agreement.
1.8 Protective Covenants. The Executive recognizes that his employment
by the Company is one of the highest trust and confidence because (i) the
Executive will become fully familiar with all aspects of the Company's business
and that of its subsidiaries during the period of his employment with the
Company, and (ii) certain information of which the Executive will gain knowledge
during his employment is proprietary and confidential information which is of
special and peculiar value to the Company or its subsidiaries (the "Proprietary
Information"). If any such Proprietary Information were imparted to or became
known by any person, including the Executive, engaging in a business in
competition with that of the Company or its subsidiaries, hardship, loss and
irreparable injury and damage could result to the Company or its subsidiaries,
the measurement of which would be difficult if not impossible to ascertain. The
Executive acknowledges that any and all Proprietary Information shall be the
sole and absolute property of the Company in perpetuity, that the Executive
shall promptly disclose such Proprietary Information to the Company, and the
Executive shall have no right, title or interest therein or to receive
additional monies therefor, regardless of whether development occurred during
working hours or any other time during the term of the Executive's employment
with the Company. The Executive shall assist the Company in obtaining patents on
all such Proprietary Information deemed patentable by the Company and shall
execute all documents necessary to obtain such patents and to vest the Company
with full and extensive title to the patents and to protect the patents against
infringement by others. The Executive agrees that any patent application filed
by the Executive within one (1) year after a termination of the Executive's
employment with the Company shall be conclusively presumed to relate to an
invention made during the term of the Executive's employment with the Company.
The Executive further acknowledges that the Company or its subsidiaries has
developed unique skills, concepts, sales presentations, marketing programs,
marketing strategy, business
practices, methods of operation, trademarks, licenses, technical information,
Proprietary Information, computer software programs, tapes and discuss
concerning its operations systems, customer lists, customer leads, documents
identifying past, present and future customers, hiring and training methods,
investment policies, financial and other confidential and proprietary
information concerning its operations and expansion plans ("Trade Secrets").
Therefore, the Executive agrees that it is necessary for the Company to protect
its business and that of its subsidiaries from such damage, and the Executive
further agrees that the following covenants constitute a reasonable and
appropriate means, consistent with the best interest of both the
14
Executive and the Company, to protect the Company or its subsidiaries against
such damage and shall apply to and be binding upon the Executive as provided
herein:
(a) Trade Secrets. The Executive recognizes that his position
with the Company is one of the highest trust and confidence by reason of the
Executive's access to and contact with certain Trade secrets of the Company and
its subsidiaries. The Executive agrees and covenants to use his best efforts and
exercise utmost diligence to protect and safeguard the Trade Secrets of the
Company and its subsidiaries. The Executive further agrees and covenants that,
except as may be required by the Company in connection with this Agreement, or
with the prior written consent of the Company, the Executive shall not, either
during the term of this Agreement or for a period of two (2) years thereafter,
directly or indirectly, use for the Executive's own benefit or for the benefit
of another, or disclose, disseminate, or distribute to another, any Trade Secret
(whether or not acquired, learned, obtained, or developed by the Executive alone
or in conjunction with others) of the Company or its subsidiaries or of others
with whom the Company or its subsidiaries has a business relationship. 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 or its subsidiaries, including, but not limited to, the
customers, suppliers, or others with whom the Company or its subsidiaries has a
business relationship, the arrangements of the Company or its subsidiaries with
such parties, and the pricing and expansion policies and strategy of the Company
or its subsidiaries, are, and shall continue to be, the sole and exclusive
property of the Company or its subsidiaries, are, and shall continue to be, the
sole and exclusive property of the Company or its subsidiaries, as applicable,
and shall, together with all copies thereof and all advertising literature, to
be returned and delivered to the Company by the within five (5) days of the
termination of this Agreement, or at any time upon the Company's demand.
(b) Inventions as Sole Property of Company. Employee agrees
promptly to disclose to the Company any and all inventions, ideas, discoveries,
improvements, trade secrets, formulas, techniques, processes, developments, know
how, and writings or other materials, whether or not patentable and whether or
not reduced to practice, conceived, made or learned by the Employee during the
period of his/her employment, either alone or jointly with others, which relate
to or result from the actual or anticipated business, work, research or
investigations of the Company, or which result, to any extent, from use of the
Company's premises or property (such inventions, ideas, discoveries,
improvements, trade secrets, formulas, techniques, processes, developments
know-how, and writings or other materials being hereinafter collectively
referred to as the "Inventions"). Employee acknowledges and agrees that all the
Inventions (including all rights of copyright therein) shall be the sole
property of the Company or any other entity designated by it, and the Employee
hereby assigns to the Company his/her entire right and interest in and to all
the Inventions. The Company or any other entity designated by it shall be the
sole owner of all domestic and foreign rights pertaining to the Inventions.
Employee further agrees as to all the Inventions to assist the
15
Company in every way (at the company's expense) to obtain and from time to time
enforce patents on the Inventions in any and all countries, and to execute all
instruments and do all other things reasonable necessary or appropriate to vest
more fully in the Company all right, title and interest in and to such
Inventions. To that end, by way of illustration but not limitation, Employee
will testify in any suit or other proceeding involving any of the Inventions,
execute all documents which the Company reasonably determines to be necessary or
convenient for use in applying for and obtaining patents thereon and enforcing
same, and execute all necessary assignments thereof to the Company or persons
designated by it. Employee's obligation to assist the Company in perfecting its
rights to the Inventions shall continue beyond the termination for the time
actually spent by Employee at the Company's request on such assistance. The
Executive shall be compensated for any such services at a daily rate equal to
one thirtieth (1/30) of the monthly Salary paid to the Executive at the time of
the Executive's termination from the Company, plus reimbursement for any
reasonable out-of-pocket expenses incurred by the Executive in rendering such
services. All inventions, if any, which Employee made prior to his/her
employment by the Company are excluded from the scope of this Agreement. As a
matter of record, Employee has set forth on Exhibit A attached hereto a complete
list of all inventions, discoveries, improvements, writings or other materials
relating to the Company's business which have been made by Employee prior to
his/her employment with the Company. Employee represents and covenants that such
list is complete.
(c) Restiction on Soliciting Customers of the Company
and its Subsidiaries. The Executive covenants that for a period of twenty-four
(24) months following the termination of this Agreement, he will not, either
directly or indirectly, (i) disclose or otherwise make known to any person or
entity the names and addresses of any of the customers of the Company, or (ii)
call on, solicit, or take away, or attempt to call on solicit or take away any
of the customers of the Company or its subsidiaries with whom he became
acquainted during his employment with the Company, either for himself or for
any other person, firm, corporation or other entity.
(d) Covenant Not to Compete. The Executive hereby covenants
and agrees that for a period of twelve (12) months following the termination, of
his employment hereunder, he will not directly or indirectly, either as an
employee, employer, consultant, agent, principal, partner, shareholder (other
than through ownership of public traded capital stock of a corporation which
represent less than five percent (5%) of the outstanding capital stock of such
corporation), corporate officer, director, investor, financier or in any other
individual or representative capacity, engage or participate in any business
located in a county in which the Company or any of its subsidiaries is doing
business as of the date of termination of the Executive's employment hereunder
which is directly competitive with the business of the Company or any of its
subsidiaries as of such date.
(e) Survival of Covenants. Each covenant of the Executive
set forth in this Section 1.8 shall survive the termination of this Agreement
and shall be construed as an agreement independent of any other provision
of this Agreement, and the existence of any
16
claim or cause of action of the Executive against the Company whether predicated
on this Agreement or otherwise shall not constitute a defense to the enforcement
by the Company of said covenant.
(f) Remedies. In the event of breach or threatened breach by
the Executive of any provision of this Section 1.8, the Company shall be
entitled to relief by temporary restraining order, temporary injunction, or
permanent injunction or otherwise, in addition to other legal and equitable
relief to which it may be entitled, including any and all monetary damages which
the Company may incur as a result of said breach, violation or threatened breach
or violation. The Company may pursue any remedy available to it concurrently or
consecutively in any order as to any breach, violation, or threatened breach or
violation, and the pursuit of one of such remedies at any time will not be
deemed an election of remedies or waiver of the right to pursue any other of
such remedies as to such breach, violation, or threatened breach or violation,
or as to any other breach violation, or threatened breach or violation.
However, in the event the Company commences an
action and does not prevail, the Company shall pay the Executive all reasonable
legal costs and expenses in connection with the defense or any action brought
by the Company against him.
1.9 Merger or Acquisition. In the event the Company should consolidate,
or merge into another corporation, or transfer all or substantially all of its
assets to another entity, or divide its assets among a number of entities, this
Agreement shall continue in full force and effect. The Company will require any
and all successors (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, to expressly assume and agree pursuant to an appropriate
written assumption agreement to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such successor shall be a breach of this
Agreement and shall entitle the Executive to terminate his employment and this
Agreement for Good Reason. As used in this Agreement, the term "Company" shall
mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which executes and delivers the assumption agreement
provided for in this Section 1.9 or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law.
1.10 Reimbursement of Employee Expenses. The Executive is authorized to
incur ordinary, necessary and reasonable expenses in connection with the
performance of his duties and responsibilities under this Agreement and for the
promotion of the business and activities of the Company during the term hereof,
including, without limitation, expenses for necessary travel and necessary
travel and entertainment and other items of expenses required ir, the normal and
routine course of the Executive's employment hereunder. The Company will
reimburse the Executive from time to time for all such business expenses
incurred pursuant to and in conformity with the provisions of this Section
17
provided that the Executive presents to the Company:
(a) An accounting in which the Executive recorded at or near
the time each expenditure was made; (i) the amount of the expenditures, (ii) the
time, place and designation of the type of entertainment and travel or other
expenses, or the date and description of the gift (gifts made to one individual
are not to exceed a total of Twenty-Five and No/100 Dollars ($25.00) in any
taxable year); (iii) the business reason for the expenditure and the nature of
the business benefit derived or expected to be derived as the result of the
expenditure; and (iv) the names, occupations, addresses and other information
concerning each person who was entertained or given a gift sufficient to
establish the business relationship to the Company; and
(b) Documentary evidence (such as receipts or paid bills)
which state sufficient information to establish the amount, date, place and
essential character of the expenditure, for such expenditure (i) of Twenty-Five
and No/100 Dollars ($25.00) or more except for transportation charges if not
readily available) and (ii) for lodging or traveling away from home.
GENERAL PROVISIONS
2.1 Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be deemed to have been
delivered on the date personally delivered or on the date deposited in a
receptacle maintained by the United States Postal Service for such purpose,
postage prepaid, by certified mail, return receipt requested, addressed to the
respective parties as follows:
If to the Executive:
Xxxxx Xxxxx
000 Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
If to the Company:
Compu-Xxxx, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
ATTN: Xxxx Xxxxxxxxxx,
Chairman of the Board
Either party hereto may designate a different address by providing written
notice of such new address to the other party hereto.
18
2.2 Severability. If any provision contained in this Agreement is
determined to be void, illegal or unenforceable, in whole or in part, then the
other provisions contained herein shall remain in full force and effect as if
the provision which was determined to be void, illegal, or unenforceable had not
been contained herein.
2.3 Waiver, Modification, and Integration. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any party. This instrument
contains the entire agreement of the parties concerning employment and
supersedes all prior and contemporaneous representations, understandings and
agreements, either oral or in writing, between the parties hereto with respect
to the employment of the Executive by the Company and all such prior or
contemporaneous representations, understandings and agreements, both oral and
written, are hereby terminated provided, however that the terms and conditions
of that separate Confidential Proprietary Information Agreement entered into by
and between the Company and the Executive shall control with respect to the
subject matter thereof. The terms of this Agreement may not be modified, altered
or amended except by written agreement of the Executive and the Company, subject
to the prior approval of the Board of Directors of the Company.
2.4 Binding Effect. This Agreement shall be binding and effective
upon the Company and its successors and permitted assigns, and upon the
Executive, his heirs and representatives.
2.5 Choice of Law and Venue. The parties agree that this Agreement is
made and entered into in Nassau County, New York and shall be governed by and
construed in accordance with the laws of the State of New York.
2.6 Representation of Executive. The Executive hereby represents and
warrants to the Company that he has not previously assumed any obligations
inconsistent with those contained in this Agreement. The Executive further
represents and warrants to the Company that the Executive has entered into this
Agreement pursuant to his own initiative and that the Company did not induce the
Executive to execute this Agreement in contravention of any existing
commitments. The Executive acknowledges that the Company has entered into this
Agreement in reliance upon the foregoing representations of the Executive.
2.7 Independent Counsel. The Company has been represented by XXXXXX X.
XXXXXXX, ESQ. The Executive has been represented by Xxxxxx Xxxxxxxxxx, Esq.
Each has made his or its own determination with respect to counsel without
coercion from the other. Each has thoroughly reviewed the provisions of this
Agreement and all matters concerning the consulting with the benefit of
independent counsel.
2.8 Arbitration Any controversy or claim arising out of or relating to
this Agreement shall be settled by binding arbitration in Nassau County, New
York under the rules
19
of the American Arbitration Association. Judgment upon the award may be
entered in any court having jurisdiction. Arbitrator(s) may not award the
prevailing party in such arbitration attorney's fees, expenses and costs of
arbitration.
2.9 Counterpart Execution. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written effective as of the Effective Date.
COMPU-XXXX, INC.
BY:/s/ Xxxx Xxx
---------------
XXXX XXX, PRESIDENT
EXECUTIVE:
/s/ Xxxxx Xxxxx
---------------
XXXXX XXXXX
Attest
/s/ Xxxx Xxxxxxxxxx
-------------------
Secretary
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