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XXXXXX TECHNOLOGIES, INC.
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement") is made and entered into as of the 20th
day of December, 2001 (the "Effective Date"), by and between Xxxxxx
Technologies, Inc. (hereinafter referred to as "Xxxxxx Technologies," "Xxxxxx"
or "Company"), a Delaware Corporation with a business address of 00-00 00xx
Xxxxxx, Xxxx Xxxxxx Xxxx, XX 00000, and Xxxxx Xxxxxx (hereinafter referred to as
"Employee"), residing at 000-00 00xx Xxxx, Xxxxxxxx, Xxx Xxxx 00000.
WITNESSETH:
WHEREAS, Xxxxxx Technologies currently employs Employee as Chief Executive
Officer of the Company, pursuant to an agreement entered into by and between the
Company and Employee as of February 29, 2000 (the "February 2000 Agreement"),
and the services of the Employee, his experience, expertise and knowledge of the
affairs of the Company are of great value to the Company; and
WHEREAS, Xxxxxx Technologies deems it essential that it continue to employ
Employee as Chief Executive Officer of the Company; and
WHEREAS, Employee consents to be so employed.
NOW THEREFORE, in consideration of the premises, of the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
I Employment
Xxxxxx Technologies hereby employs Employee, and Employee hereby agrees to
be employed, as Chief Executive Officer of the Company upon the terms and
conditions herein set forth. Concurrent with the effectiveness of this
Agreement, the February 2000 Agreement shall expire by mutual agreement of the
parties and shall have no further force and effect.
Employee shall have such duties, responsibilities and powers as are
customary and appropriate for such office including, without limitation, the
strategic oversight of the Company. Employee agrees to devote his reasonable
best diligence and his full time to the performance of his duties hereunder.
Employee's principal place of employment shall be at the Company's headquarters
in Long Island City, New York; Employee shall travel as reasonably required in
the performance of his duties hereunder.
Employee shall serve as a member of the Company's Board of Directors,
subject to election by the Company's shareholders. As a Director, Employee shall
have all the rights, responsibilities and obligations conferred and/or imposed
upon all the members of the Board of Directors pursuant to relevant law, rule
and regulation, as well as the Company's Certificate of Incorporation and
By-Laws.
II Term
The term of Employee's employment hereunder shall be three (3) years,
ending on December 20, 2004. This Agreement and Employee's employment thereunder
shall be renewable thereafter on a year-to-year basis, unless either party gives
60 days written notice of termination before the end of the then-current term.
III Compensation & Benefits
Xxxxxx Technologies shall pay Employee, as full consideration for the
services to be rendered hereunder, compensation consisting of the following:
(1) An initial Annual Base Salary of $242,000, payable bi-monthly or in
accordance with any other payment schedule as may be adopted
generally for the payment of the Company's payroll. Said Annual Base
Salary may be increased annually, on each anniversary of the
Effective Date of this Agreement (the "Anniversary Date"), as
follows: (a) in the event that the aggregate EBITDA earned by the
Company, during the four consecutive fiscal quarters ending on the
September 30th immediately preceding the Anniversary Date, is
greater than zero, the Annual Base Salary shall be increased by a
minimum of eight percent (8 %), or by such greater percentage as may
be determined by the Board of Directors in the exercise of its
discretion; or (b) in the event that the aggregate EBITDA earned by
the Company, during the four consecutive fiscal quarters ending on
the September 30th immediately preceding the Anniversary Date, is
equal to or less than zero, the Annual Base Salary shall not be
increased. Additionally, Employee shall be eligible for annual
merit, or cost-of-living increases as may be determined by the
Executive Compensation Committee of the Board of Directors.
(2) In the event that the EBITDA earned by the Company during any fiscal
year during the term of this Agreement exceeds $ 3,000,000, Employee
shall receive incentive compensation in the amount of one percent
(1%) of such EBITDA. However, such incentive compensation is capped
at $100,000 per fiscal year; in no event shall Employee receive more
than $100,000 in such incentive compensation per fiscal year. (To
illustrate, in the event that the Company's EBITDA equals $3,000,000
or less during any fiscal year, Employee shall not receive any
incentive compensation hereunder; in the event that the Company's
EBITDA equals $4,000,000 during any fiscal year, Employee shall
receive incentive compensation in the amount of $40,000; and in the
even that Company's EBITDA equals $10,000,000 or more during any
fiscal year, Employee shall receive incentive compensation in the
amount of $100,000.)
(3) (i) fifty thousand (50,000) employee stock options, to be issued as
of the Effective Date of this Agreement pursuant to the Company's
1996 Employee Stock Option Plan; (ii) an additional fifty thousand
(50,000) employee stock options to be issued on the First
Anniversary Date hereof; and (iii) an additional fifty thousand
(50,000) employee stock options to be issued on the Second
Anniversary Date hereof. All of the options issued, or to be issued,
pursuant to this paragraph
shall have an exercise price equal to : (a) one hundred ten percent
(110%) of the average closing price of the Company's publicly-traded
shares during the 5-day trading period ending on the date such
options are issued, in the event that the Employee owns stock
possessing more than ten percent (10%) of the total combined voting
power of all outstanding shares of the Company as of the date such
options are issued, or (b) the average closing price of the
Company's publicly-traded shares during the 5-day trading period
ending on the date such options are issued, in the event that the
Employee does not own stock possessing more than ten percent (10%)
of the total combined voting power of all outstanding shares of the
Company as of the date such options are issued. All of the options
issued, or to be issued, pursuant to this paragraph shall become
fully vested one year following the date such options are issued.
(4) Participation in any incentive compensation plan, pension or
profit-sharing plan, stock purchase or stock option plan,
(including, without limitation, the Company's 1996 Employee Stock
Option Plan), annuity or group insurance plan previously adopted by
the Company or which may be adopted by the Company at some future
date, on terms and in amounts no less favorable than provided for
other Xxxxxx employees similarly employed.
(5) Immediate granting and full-vesting of all Company stock options
previously issued to Employee, or to be issued hereunder to
Employee, in the event that, and at such time as, Xxxxxx
Technologies has a change in control or is acquired by another
entity or company. (For purposes of this Agreement, "control" is
defined as any event or circumstance that would require disclosure
pursuant to Item 1 of Form 8-K or any comparable requirement of the
Securities and Exchange Commission.).
(6) Employment benefits generally provided to Xxxxxx employees,
including medical and dental insurance, on terms and in amounts no
less favorable than provided for other Xxxxxx employees similarly
employed.
(7) Fifteen (15) business days per year for vacation time, and five
business days per year for sick or personal leave, during which
times Employee will be compensated the normal pro-rated portion of
his base salary.
(8) A discretionary spending allowance in the amount of $10,000 per
year, which allowance may be utilized at Employee's sole discretion
for the payment of costs and expenses relating to or arising out of
the Company's business, potential business or the Employee's
employment hereunder. The Company shall promptly establish a bank
checking account in Employee's name into which the Company shall
deposit the sum of $10,000 on or about January 2nd of each calendar
year. Said checking account shall be linked to a debit credit card
issued in Employee's name.
(9) Reimbursement for all expenses incurred by Employee in the ordinary
course of his performance of duties hereunder and submitted by him
with supporting documentation to the Company's accounting
department, in terms no less favorable than provided for other
Xxxxxx employees similarly employed.
(10) Monthly payments of up to $500 to pay for the cost of a leased
automobile to be used by Employee. Additionally, the Company shall
make full payment of automobile insurance premiums and operating
expenses relating to said automobile.
IV Termination For Cause
The Company shall have "cause" to terminate this Agreement in the event
that : (i) all of the members of the Company's Board of Directors, excluding
Employee, determine that (a) the Employee has committed an act of fraud against
the Company, or (b) the Employee has committed an act of malfeasance,
recklessness or gross negligence against the Company that is injurious to the
Company or its customers; or (ii) the Employee has materially breached the terms
of this Agreement; or (iii) the Employee's indictment or conviction for or plea
of no contest to, a felony or a crime involving the Employee's moral turpitude.
If Employee's termination for cause hereunder is based upon Employee's material
breach of the terms of this Agreement, then Employee shall be given 30 days'
notice of such termination and shall have the opportunity to cure such material
breach during said 30-day period.
V Severance
In the event that Employee is terminated by the Company for cause,
pursuant to the terms of Section IV above, he shall receive no severance
payments from the Company.
In the event that Employee's employment hereunder is terminated on any
other grounds, he shall continue to receive the compensation and benefits set
forth in Section III above for a period of two (2) years or the remainder of the
term of this Agreement, whichever time period is shorter.
If the Company effects any change in Employee's title, or diminishes, in
any significant manner, Employee's duties or responsibilities of employment,
then Employee shall have the immediate right, at his sole option, to
unilaterally resign from employment hereunder. In the event of such resignation,
Employee shall continue to receive the compensation and benefits set forth in
Section III above for a period of one year following the date of such
resignation, and shall make himself available to act as a consultant for the
Company during such one-year period.
In the event that, and at such time as, Xxxxxx Technologies has a change
in control or is acquired by another entity or company, Employee shall have the
immediate right, at his sole option, to unilaterally resign from employment
hereunder. In the event of such resignation, Employee shall : (a) continue to
receive the compensation and benefits set forth in Section III above for the
remainder of the term of this Agreement; and, in addition thereto, (b) within 10
days of such resignation, be paid a bonus payment in a sum equal to Employee's
Annual Base Salary at the time of such resignation. (For purposes of this
Agreement, "control" is defined as any event or circumstance that would require
disclosure pursuant to Item 1 of Form 8-K or any comparable requirement of the
Securities and Exchange Commission.);
VI Non-Disclosure
(1) Employee recognizes that the Company possesses and will continue to
possess non-public information that has been created, discovered,
developed, or otherwise become known to it, and/or in which property
rights have been assigned or otherwise conveyed to it, which
information has commercial value in the business in which it is
engaged or may become engaged. All of the aforementioned information
is hereinafter called "Proprietary Information."
(2) By way of illustration, but not limitation, Proprietary Information
includes trade secrets, processes, structures, formulas, data,
know-how, improvements, inventions, product concepts, techniques,
marketing plans, strategies, forecasts, customer lists and
information about the Company's employees and/or consultants.
(3) At all times, both during Employee's employment by the Company and
after its termination, Employee shall keep in confidence and trust
all Proprietary Information, and Employee shall not use or disclose
any Proprietary Information or anything directly relating to it
without the written consent of a majority of the members of the
Board of Directors of the Company, except as may be necessary in the
ordinary course of Employee's performing his duties as an employee
of the Company and only for the benefit of the Company.
VII Non Competition and Non Solicitation
During the period of Employee's employment by the Company and for a period
of twelve months following the termination of the Employee's Employment with the
Company, Employee shall not: (i) engage or become interested in any way (whether
as an owner, stockholder, partner, lender, investor, director, officer,
employee, consultant or otherwise) in any activity, business or enterprise,
located within the geographical area of the United States or Canada, that is
competitive with any significant part of the business conducted by the Company
or as contemplated to be conducted by it which, for purposes of this Paragraph,
shall be deemed to be competitive if it involves predominantly similar types of
products or services and is directed at predominantly similar types of customers
as any business of the Company (except that ownership of not more than 5% of the
outstanding securities of any class of any corporation that are listed on a
national securities exchange or traded in the over-the-counter market shall not
be considered a breach of this Paragraph ); or (ii) solicit or hire for any
purpose any employee of the Company, or any employee who has left such
employment within the previous six months.
VIII Miscellaneous Provisions
(1) Acknowledgments and Affirmations: Employee recognizes, understands,
agrees and acknowledges that the Company has a legitimate and
necessary interest in protecting its goodwill and Proprietary
Information. Employee further affirms, represents, and acknowledges
that in the event of Employee's termination of employment with the
Company, Employee's experience and capabilities are such that the
enforcement of this Agreement will not prevent him from obtaining
employment in another line of business different from that carried
on by the Company and permitted under this Agreement. Employee
further affirms, represents and acknowledges that Employee has
received good and valuable consideration for entering into this
Agreement.
(2) Remedies for Breach. Employee agrees that any breach of this
Agreement by Employee would cause irreparable damage to the Company
and that, in the event of such breach, the Company shall have, in
addition to any and all remedies at law, the right to an injunction,
specific performance or other equitable relief to prevent or redress
the violation of Employee's obligations hereunder.
(3) Separability. If any provision hereof shall be declared
unenforceable for any reason, such unenforceability shall not affect
the enforceability of the remaining provisions of this
Agreement.Further, such provision shall be reformed and construed to
the extent permitted by law so that it would be valid, legal and
enforceable to the maximum extent possible.
(4) Applicable Law. Any dispute arising under or related in any manner
to this Agreement or to Employee's employment by the Company or to
the termination of said employment shall in all respects be governed
by, adjudicated, construed and enforced in accordance with the laws
of the State of New York.
(5) Jurisdiction and Venue. Employee irrevocably and unconditionally
submits to the exclusive jurisdiction of any United States federal,
state or city court sitting in New York in any action or proceeding
relating in any manner to this Agreement or to Employee's employment
by the Company or to the termination of said employment. Further,
Employee irrevocably and unconditionally agrees that all claims
relating in any manner to this Agreement or to Employee's employment
by the Company or to the termination of said employment may be heard
and determined in any such court and waives any objection Employee
may now or hereafter have as to venue of any such action or
proceeding brought in such court or the fact that such court is an
inconvenient forum.
XXXXXX TECHNOLOGIES, INC. XXXXX XXXXXX
00-00 00XX Xxxxxx
Xxxx Xxxxxx Xxxx, XX 00000
By: /S/ Xxxxxxx X. Xxxxxx /S/ Xxxxx Xxxxxx
---------------------------- ------------------------
(signature)
Title: President
