EMPLOYMENT AGREEMENT
Exhibit 10.1
EMPLOYMENT AGREEMENT dated as of this 17th day of December, 2007 between Veramark
Technologies, Inc., a Delaware corporation with its principal office located at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxx Xxxx 00000 (the “Company”), and Xxxxxxx X. Xxxxxxxx, an individual residing at [*],
Xxxxxxxx, Xxx Xxxx 00000 (“Executive”).
WHEREAS, the Company desires to employ Executive as President and Chief Executive Officer of
the Company upon the terms and conditions hereinafter set forth, and
WHEREAS, Executive desires to serve in such capacity upon the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and
intending to be bound, the parties agree as follows:
1. Employment — Duties.
(a) The Company hereby agrees to employ Executive as President and Chief Executive of the
Company, and Executive hereby accepts such employment by the Company. Executive shall report to,
and be under the direction of the Company’s Board of Directors (the “Board”) or a duly authorized
committee of the Board, and shall have such duties as may be specified by the Board that are
consistent with Executive’s positions as President and Chief Executive Officer. Executive’s duties
may be changed from time to time by the Board; provided, however, that Executive’s position,
authority, duties and responsibilities shall be no less senior and executive in nature than those
customarily performed by a president and chief executive officer. Executive shall perform his
duties for the Company principally at the offices of the Company, provided, however, that Executive
acknowledges and agrees that travel in furtherance of the Company’s business is required in
connection with the performance of Executive’s duties hereunder. Executive agrees to devote his
best efforts and all his business time, skills and attention exclusively to the business and the
best interests of the Company. During the term of this Employment Agreement, Executive shall not
engage in any other business activity; provided, however, that Executive may continue to manage the
current real estate rental properties owned by him in Monroe County, New York, so long as doing so
does not materially interfere in the reasonable opinion of the Board with the rendering by him of
his services to the Company as contemplated in this Agreement.
During the term of this Employment Agreement, Executive shall be nominated for election as a
director commencing with the first annual meeting of stockholders to be held following the
Commencement Date and at each annual meeting of stockholders following thereafter.
[*] Denotes expurgated information
- 1 -
2. Term.
(a) Unless sooner terminated as provided in Section 5 of this Employment Agreement, the
initial term of this Employment Agreement (the “Initial Term”) shall commence on January 1, 2008
(“Commencement Date”) and end on December 31, 2010. On January 1, 2009, and each anniversary
thereafter, the term of this Employment Agreement will be automatically extended beyond the Initial
Term for additional successive one-year periods unless either party notifies the other in writing
not less than ninety (90) days prior to each anniversary of the Commencement Date that this
Employment Agreement will not be extended.
(b) The termination of this Employment Agreement, however arising, shall not affect any of the
provisions hereof as are expressed to operate or have effect after the termination of Executive’s
employment.
3. Compensation.
(a) Base Salary. From the Commencement Date, as compensation for Executive’s
services, the Company shall pay to Executive a salary at the rate of Two Hundred Twenty-five
Thousand Dollars ($225,000)) per annum (the “Salary”). The Salary shall be reviewed six (6) months
from the Commencements Date (on or about July 1, 2008), twelve (12) months from the Commencement
Date (on or about January 1, 2009) and annually thereafter, and may be increased (but not
decreased) from period to period, based on reviews of Executive’s performance and as determined by
the Board of Directors in its sole discretion. Any increase authorized by the Board shall be
effective as of a date determined by the Board in its sole discretion.
The Salary shall be payable in accordance with the executive payroll schedule in effect from
time to time at the Company (currently on a bi-weekly basis), but in no event less frequently than
monthly.
(b) Bonus.
(i) Annual Performance Bonus. As additional compensation for Executive’s services
hereunder, Executive shall be eligible for an annual performance bonus (the “Performance Bonus”).
Annually, and prior to the commencement of each calendar year, the Board or an authorized committee
shall establish annual targets and objectives (the “Targets”), including total revenues and
operating income performance targets (the “Financial Targets”) for Executive; provided, however,
that the Targets for calendar 2008 shall be established on or before March 1, 2008. If the Targets
are achieved for the applicable calendar year, Executive shall be entitled to a Performance Bonus
payment of Sixty Thousand Dollars ($60,000). Should some, but less than all, of the Targets be
achieved, Executive shall be entitled to a Performance Bonus payment established by the Board but
in no event less than $20,000. In the event that both of the Financial Targets are exceeded,
Executive shall receive an additional Performance Bonus payment of Twenty Thousand Dollars
($20,000)
- 2 -
for each ten percent (10%) that both the Targets are exceeded up to a maximum additional
Performance Bonus payment of Sixty Thousand Dollars ($60,000) [at one hundred thirty percent (130%)
of both of the Targets], for a maximum Performance Bonus award in any given calendar year of One
Hundred Twenty Thousand Dollars ($120,000). The calculation of the Performance Bonus shall be
determined by the Board in its sole discretion within thirty (30) days of the completion of the
Company annual audit, which determination shall be final and binding, and paid within thirty (30)
days of such calculation.
(ii) Restricted Stock Award. Executive shall be eligible for an award of Two Hundred
Thousand (200,000) restricted shares (“Restricted Shares”) of the Common Stock of the Company
subject to the terms and conditions of the Company’s 1998 Long-Term Incentive Plan (the “Plan”).
The Restricted Shares are performance based and Executive shall be deemed to earn the such shares
ratably over a three (3) year period upon the achievement of total revenue, operating profit, stock
price and product development goals which shall be determined by the Board on or before March 31,
2008. Should Executive earn any of the Restricted Shares based on the goals established, the
Company, at the request of Executive, agrees to purchase from the Executive up to fifty percent
(50%) of the Restricted Shares earned in any calendar year. Any such purchase shall be at the
option of the Executive upon written notice to the Company from the Executive within one year of
the date such Restricted Shares are deemed earned. The purchase price for each such Restricted
Shares shall be the fair market value of the Company’s common stock on the date such Restricted
Shares were deemed earned, as determined by the Board, consistent with prior practice. Payment for
such Restricted Shares shall be made within fifteen (15) days of receipt of the aforementioned
notice and receipt of the certificate(s) representing the Restricted Shares duly endorsed by the
Executive.
4. Benefit Plans, Vacations, Expenses.
(a) During the term of this Employment Agreement, Executive shall be eligible to participate
in all medical, disability, bonus, stock option, 401(k) or other benefit plans or arrangements
generally made available by the Company to its executive employees, and other perquisites generally
afforded from time to time to other executive employees of the Company. Without limiting the
foregoing:
(i) Company shall reimburse Executive for the payment by Executive of monthly dues in a
country club and in a health club of Executive’s choosing up to an annual cost of Twelve Thousand
Dollars ($12,000); and
(ii) Executive shall be entitled to receive four (4) weeks of paid vacation in each full
calendar year of this Employment Agreement.
(iii) The Company shall reimburse Executive for reasonable expenses incurred by Executive in
connection with performing services hereunder for the Company in accordance with the Company’s
policies in effect from time to time for all executive officers of the Company; provided that such
expenses are necessary and appropriate to Executive’s employment hereunder; and further provided
that Executive submits to the Company written, itemized expense accounts and such additional
substantiation and justification as the Company
- 3 -
may reasonably request.
5. Termination.
(a) Death. Executive’s employment hereunder shall terminate upon Executive’s death.
(b) Cause. The Company reserves the right to terminate this Employment Agreement and
Executive’s employment with the Company for Cause. As used herein, “Cause” means:
(i) Executive’s conviction for, or guilty plea or plea of nolo contendre with respect to, any
felony or any lesser crime involving moral turpitude, theft or fraud;
(ii) Executive’s misconduct or gross negligence which has resulted or is likely to result in
material damage to the Company or its reputation and which is not cured within twenty (20) days
after written notice specifying such misconduct or gross negligence, provided that Executive shall
only be entitled to one (1) notice under this provision;
(iii) Executive’s act of fraud, dishonesty, or theft in respect to the Company;
(iv) Executive’s failure or refusal to perform any of his material duties or to carry out the
lawful instructions of the Board or the President, which is not cured within thirty (30) days after
written notice specifying the failure or refusal, provided that Executive shall only be entitled to
one (1) notice under this provision;
(v) Executive’s serious misconduct, unrelated to the Company’s business and affairs, which, in
the reasonable opinion of the Board, will bring Executive or the Company into disrepute or
seriously and prejudicially affect the interests of the Company, or
(vi) Executive’s breach of any covenant set forth in Section 7 of this Employment Agreement.
Executive shall not be deemed to have been terminated for Cause unless and until there shall
have been delivered to Executive a Notice of Termination (as hereinafter defined in Section 5(e)
below) specifying the particulars thereof. Without limiting the foregoing, the Executive shall be
afforded the opportunity to meet with the Board or an authorized committee of the Board to discuss
and review the matters contained in the Notice of Termination.
(c) Disability. The Company reserves the right to terminate this Employment Agreement
and Executive’s employment with the Company as a result of Executive’s Disability. As used herein
“Disability” means Executive’s physical or mental disability or illness which renders Executive
unable to perform the essential functions of Executive’s duties in a reasonably satisfactory manner
under this Employment Agreement for a period of six (6) consecutive months or One Hundred Eighty
(180) days within a twelve month (12) period.
- 4 -
(d) Voluntary Termination. Executive and the Company reserve the right to terminate
this Employment Agreement and Executive’s employment with the Company by Voluntary Termination. As
used herein, “Voluntary Termination” shall mean termination by (i) Executive on Executive’s own
initiative or (ii) by the Company on the Company’s own initiative for reasons not specified under
Sections 5(a) through Section 5(c). Each party shall give the other at least ninety (90) days
prior written notice of any Voluntary Termination. If Executive gives a Notice of Termination
pursuant to this Section 5(d), the Company may, at its option, terminate the Employment Agreement
and Executive’s employment with the Company at any time during the 90-day notice period by written
notice to Executive.
(e) Notice of Termination. Any termination of this Employment Agreement and
Executive’s employment by the Company shall be communicated by written Notice of Termination to
Executive. Any termination for Voluntary Termination by Executive shall be communicated by written
Notice of Termination to the Company. For purposes of this Employment Agreement, a “Notice of
Termination” shall mean a notice that indicates the specific termination provision in this
Employment Agreement relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive’s employment under the
provision so indicated.
(f) Date of Termination. “Date of Termination” shall mean:
(i) The date of expiration of the Initial Term or any extension period, unless this Employment
Agreement is extended pursuant to Section 2(a);
(ii) If this Employment Agreement and Executive’s employment is terminated by his death, the
date of his death;
(iii) If this Employment Agreement and Executive’s employment is terminated pursuant to
Section 5(b) or 5(c), the date of the Notice of Termination; and
(iv) If Executive or the Company terminates this Employment Agreement and Executive’s
employment pursuant to 5(d), the last day of the 90-day notice period, unless the Company exercises
its option to terminate the Executive during the 90-day notice period, in which event the Date of
Termination shall be the date specified in the Company’s written notice of its exercise of such
option.
6. Compensation Upon Termination or During Incapacity.
(a) If this Employment Agreement and Executive’s employment is terminated pursuant to Section
5(a) or by Executive pursuant to Section 5(d), or if this Employment Agreement and Executive’s
employment is terminated pursuant to Section 5(b), the Company shall pay to Executive, or to
Executive’s estate, the Salary payable to the Date of Termination and any accrued and unused
vacation for the year in which the termination occurs, pro rated to the Date of Termination;
provided that if the Company exercises its option under Section 5(d), it will pay Executive the
Salary for the remainder of the ninety-day notice period. In addition, the
- 5 -
Company shall maintain Executive’s medical insurance coverage through the Date of Termination.
(b) During absence from work by reason of incapacity through ill health or injury, the Company
shall pay Executive the Salary for each day of absence until the Date of Termination as a result of
Executive’s Disability.
(c) If this Employment Agreement and the Executive’s employment is terminated by the Company
pursuant to Section 5(d) and other than in connection with the Company’s exercise of its option to
terminate Executive’s employment during the 90-day notice period in connection with a Voluntary
Termination by Executive, then the Company shall pay to Executive the compensation payable pursuant
to Section 6(a). In addition, and subject to execution and delivery by Executive of a severance
agreement and release in form and substance satisfactory to the Company, (i) the Company shall
continue to pay Executive the Salary at the rate in effect on the Date of Termination for a period
equal to six (6) months from the Date of Termination, or (ii) in the case of such termination
within six (6) months from the effective date of a Change in Control, as that term is hereinafter
defined, the Company shall continue to pay Executive the Salary at the rate in effect on the Date
of Termination, for a period equal to twelve (12) months from the Date of Termination, plus in each
case an amount equal to that amount of the Performance Bonus paid to Executive for the prior
calendar year pro-rated to the Date of Termination. The Company shall continue Executive’s medical
coverage for the period during which it continues to pay the Salary pursuant to this Section 6(c),
unless Executive obtains medical coverage through other employment.
(d) The provisions of this Section 6 shall be Executive’s sole and exclusive remedy in the
event of termination of this Employment Agreement and Executive’s employment hereunder.
(e) For purposes of this Agreement, a “change in control” shall be deemed to have occurred if
(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or a corporation owned, directly or
indirectly by the stockholders of the Company in substantially the same proportions, becomes after
the Commencement Date the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 20% or more of the combined
voting power of the Company’s then outstanding securities; or (ii) the composition of the Board
changes, at any time after December 31, 2008, such that less than a majority of the members of the
Board are individuals who were (i) members of the Board at the beginning of the calendar year then
in effect or (ii) persons whose election by the Board or nomination for election by the Company’s
stockholders was approved by a vote of at least three-fourths (3/4) of the directors then still in
office who either were directors at the beginning of the period or whose election or nomination for
election was previously so approved; or (iii) substantially all the assets of the Company are
disposed of by the Company pursuant to a merger, consolidation, partial or complete liquidation, a
sale of assets (including stock of a subsidiary) or otherwise, in a transaction or a series of
transactions whereby the holders of the Company’s common stock prior to the transaction do not
continue to hold at least fifty percent (50%) of the voting stock or similar equity of the Company
or the combined or acquired entity
- 6 -
upon the consummation of the transaction, but not including a reincorporation or similar
transaction resulting in a change only in the form of ownership of such assets.
7. Confidentiality and Restrictions.
(a) Executive hereby recognizes that the value of the Confidential Information, as defined
below, of the Company and the Confidential Information to be disclosed to Executive by the Company
and its affiliates in the course of Executive’s employment with the Company is attributable
substantially to the fact that such Confidential Information has been and continues to be
maintained by the Company, its affiliates, and their respective licensors, suppliers, contractors,
customers, and prospects in the strictest confidentiality and secrecy and is unavailable to others
without the expenditure of substantial time, effort or money. Executive, therefore, covenants and
agrees to keep strictly secret and confidential the Confidential Information in accordance with the
following provisions of this Section 7(a). Executive covenants and agrees that, during the term of
this Employment Agreement, and at all times thereafter, Executive shall safeguard the Confidential
Information, and Executive shall not, directly or indirectly, use or disclose any such Confidential
Information except as required in the course of Executive’s employment with the Company. In
implementation of the foregoing, Executive shall not disclose any of the Confidential Information
to any employee or consultant except to the extent that such disclosure is necessary for the
effective performance of such employee’s or consultant’s responsibilities to the Company. The
obligations undertaken by Executive pursuant to this Section 7(a) shall not apply to any
Confidential Information which hereafter shall become published or otherwise generally available to
the public, except in consequence of a willful act or omission by Executive in contravention of the
obligations hereinabove set forth in this Section 7(a), and such obligations shall, as so limited,
survive expiration or termination of this Employment Agreement. As used in this Section 7,
“Confidential Information” means all information not in the public domain relating to the business
of the Company, its affiliates, and their respective customers, prospects, licensors, suppliers and
contractors, and the designs, products and programs developed and/or commercialized by any of the
foregoing, including, without limitation, information relating to inventions, ideas, designs,
discoveries, know-how, methods, research, engineering, data, databases, operations, techniques,
software, software codes, customer lists, prospect lists and other trade secrets.
(b) On the termination of this Employment Agreement for any reason, Executive will deliver to
the Company all correspondence, documents, papers and other media containing information about the
Confidential Information together with all copies thereof in Executive’s possession or control.
(c) During the term of this Employment Agreement and for a period equal to twelve (12) months
after the termination of this Employment Agreement for any reason whatsoever (except in the case of
termination of this Employment Agreement by the Company pursuant to Section 5(d) in which case the
applicable period above shall be reduced to six (6) months), Executive shall not engage (and shall
assure that none of Executive’s agents, affiliates or associates engages) in competition with, or
directly or indirectly, perform services (as employee, officer, manager, consultant, independent
contractor, advisor or otherwise) for or own any equity
- 7 -
interest (other than an aggregate of not more than one percent (1%) of the stock issued by any
publicly held corporation) in any enterprise that engages in competition with the business
conducted by the Company or by any of its affiliates, anywhere in the world.
(d) During the term of this Agreement and for a period equal to twelve (12) months after the
termination of this Employment Agreement for any reason whatsoever (except in the case of
termination of this Employment Agreement by the Company pursuant to Section 5(d) in which case the
applicable period above shall be reduced to six (6) months), Executive shall not, directly or
indirectly, solicit for employment, offer employment to, or employ for Executive’s own account or
for the account of another, any employee or consultant of the Company or any of its affiliates;
provided, however, that this section 7(d) shall not prohibit any such person from soliciting or
hiring anyone solely by means of a general solicitation that is not directed at the employees (or
any particular employee) of the Company.
(e) During the term of this Agreement and for a period equal to twelve (12) months after the
termination of this Employment Agreement for any reason whatsoever (except in the case of
termination of this Employment Agreement by the Company pursuant to Section 5(d) in which case the
applicable period above shall be reduced to six (6) months), Executive shall not, directly or
indirectly, solicit, raid, entice or otherwise induce any customer and/or supplier of the Company
or any of its affiliates to cease doing business with the Company or any of its affiliates or to do
business with a competitor with respect to products and/or services that are competitive with the
products and/or services of the Company or any of its affiliates.
(f) Executive shall not, during or after the term of this Agreement, make any statement nor do
any act which will disparage, defame or injure the goodwill or reputation of the Company.
(g) Executive agrees that the restrictions in this Section 7 are reasonable and necessary to
protect the Confidential Information. Executive expressly agrees that, in addition to any other
rights or remedies which the Company may have, the Company shall be entitled to injunctive and
other equitable relief to prevent a breach of this Section 7 by Executive, including a temporary
restraining order or temporary injunction from any court of competent jurisdiction restraining any
threatened or actual violation, and Executive consents to the entry of such an order and injunctive
relief and waives the making of a bond or undertaking as a condition for obtaining such relief.
8. Intellectual Property.
Executive acknowledges and agrees that the Company is and remains the sole owner of all the
fruits and proceeds of Executive’s services hereunder, including, but not limited to, all ideas,
designs, inventions, concepts, developments, discoveries, whether or not protectable, and other
properties which Executive may create or conceive in connection with Executive’s employment
hereunder during the term of this Employment Agreement, free and clear of any claims by Executive
(or any successor or assignee of Executive) of any kind or character whatsoever other than
Executive’s right to compensation hereunder. Executive further acknowledges and agrees that the
Company is and remains the sole owner of all ideas,
- 8 -
inventions, concepts, developments, discoveries, whether or not protectable, and other
properties which Executive may create or conceive within twelve (12) months of the Date of
Termination and which are based, in whole or in part, on the Confidential Information, free and
clear of any claims by Executive (or any successor or assignee of Executive) of any kind or
character whatsoever other than Executive’s right to compensation hereunder. Executive agrees that
he shall, at the request of the Board, execute such assignments, certificates or other instruments
as the Board shall from time to time deem necessary or desirable to evidence, establish, maintain,
perfect, protect, enforce or defend the Company’s rights, title and interest in or to any
properties referred to in this Section 8.
9. Miscellaneous.
(a) Entire Agreement. This Employment Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof, and all other prior or contemporaneous
agreements of the parties with respect to said subject matter are hereby merged into and superseded
by this Employment Agreement. This Employment Agreement may not be changed, modified or amended
other than by a further written agreement signed by both parties hereto.
(b) No Waiver. The failure or omission of either party to insist, in any instance,
upon strict performance by the other party of any term or provision of this Employment Agreement or
to exercise any of such party’s rights hereunder shall not be deemed to be a modification of any
term hereof or a waiver or relinquishment of the future performance of any such term or provision
by such party, nor shall such failure or omission constitute a waiver of the right of such party to
insist upon future performance by the other party of any such term or provision.
(c) Governing Law. This Employment Agreement shall be governed by, and shall be
construed and interpreted in accordance with, the laws of the State of New York, without giving
effect to any choice of law doctrine.
(d) Notice. Any notice, request, demand, statement, authorization, approval or
consent made hereunder shall be addressed to the appropriate party at the address written above in
writing, and shall be hand-delivered or sent by Federal Express, or other reputable courier
service, or by postage prepaid certified mail, return receipt requested, or by facsimile or
electronic mail (copy by postage prepaid certified mail), and shall be deemed given when delivered
if hand delivered or sent by Federal Express or other reputable courier service, or when sent if
sent by certified mail, facsimile or electronic mail.
Either party may change its address for the receipt of such notices by giving written notice
to the other party in the manner herein provided.
(e) Assignment. This Employment Agreement shall inure to the benefit of, and bind,
the parties hereto and their respective successors and assigns, provided, however,
Executive shall not assign or transfer any of his rights under this Employment Agreement nor
delegate any of his duties hereunder without the prior written consent of the Board.
- 9 -
(f) Severability. If, in any jurisdiction, any provision of this Agreement or its
application to any party or circumstance is restricted, prohibited or unenforceable, such provision
shall, as to such jurisdiction, be ineffective only to the extent of such restriction, prohibition
or unenforceability without invalidating the remaining provisions hereof and without affecting the
validity or enforceability of such provision in any other jurisdiction or its application to other
parties or circumstances. In addition, if any one or more of the provisions contained in this
Employment Agreement shall for any reason in any jurisdiction be held to be excessively broad as to
time, duration, geographical scope, activity or subject, it shall be construed, by limiting and
reducing it, so as to be enforceable to the extent compatible with the applicable law of such
jurisdiction as it shall then appear.
(g) Key Employee Insurance. Company, in its sole discretion shall have the right at
its expense to purchase insurance on the life of Executive, in such amounts as it shall from time
to time determine, of which the Company shall be the beneficiary. Executive shall submit to such
physical examinations as may reasonably be required and shall otherwise cooperate with the Company
in obtaining such insurance.
(h) Headings and Counterparts. Headings are inserted for reference purposes only and
shall not affect the interpretation or meaning of this Employment Agreement. This Agreement may be
executed in several counterparts, each of which shall be deemed to be an original but all of which,
together, will constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
- 10 -
IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement, the Company by
its duly-authorized officer, as of the date set forth above.
| VERAMARK TECHNOLOGIES, INC. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxxxx | |||
| Xxxxxxx X. Xxxxxxxxxxx, | ||||
| Chairman, Compensation Committee | ||||
| /s/ Xxxxxxx X. Xxxxxxxx | ||||
| Xxxxxxx X. Xxxxxxxx | ||||
- 11 -
