Exhibit 10.38
EXHIBIT C
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement"), dated this 15th day of
September, 1995, by and between SOFTNET SYSTEMS, INC., a New York corporation
(the "Company"), whose principal place of business is 000 XxXxxxx Xxxxx,
Xxxxxxxx Xxxx, XX 00000 and XXXX X. XXXXXXXX, XX., residing at 0000 X. 000xx
Xxxxxxx, Xxxxxxx, XX 00000 (the "Employee").
W I T N E S S E T H:
WHEREAS, the Company is engaged in the business of providing
telecommunications services; and
WHEREAS, the Employee is familiar with the administration and management of
a telecommunications business; and
WHEREAS, the parties acknowledge that the Employee's abilities and services
are unique and essential to the prospects of the Company; and
WHEREAS, the Employee and the Company are desirous of entering into an
agreement providing for the employment by the Company of the Employee in the
positions and upon the terms provided herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Employment, Duties and Term. The Company hereby employs the Employee
and the Employee hereby accepts employment upon the terms and conditions
hereinafter set forth.
(a) The Company agrees to employ the Employee in the position of
Executive Vice President of the Company, President of the Telecommunications
division of the Company, and Chairman of Kansas Communications, Inc. and
Employee agrees to perform such duties and tasks as the Company may from time to
time reasonably request, during the three year period from the date hereof
through September 15, 1998 (the "Employment Period"). The period from the first
day of September 15 to the last day of September 14 during each year of the
Employment Period is hereafter referred to as an "Employment Year." The Company
also agrees during the Employment Period to nominate Employee as part of the
Company's management slate for election to its Board of Directors.
(b) The Employee hereby accepts such employment and agrees to devote
his full time and attention to such duties, except during usual vacation periods
and for personal and sick leave in accordance with the Company's policies. The
Company agrees that Employee will perform his duties hereunder primarily in
Lenexa, Kansas, and that Employee will not be required to relocate his residence
during the term of the Employment Agreement. Employee, however, agrees to
periodically travel to the Company's headquarters in Lincolnshire, Illinois or
such other locations as reasonably required by the Company to perform his duties
hereunder. The Company acknowledges that Employee serves on the Board of
Directors of Torotel, Inc. and may devote a reasonable amount of time to such
activity as long as it does not materially affect Employee's services hereunder.
2. Compensation.
(a) Upon the execution of this Agreement, the Company shall deliver
to Employee the Common Stock Purchase Warrant in the form as attached hereto as
Exhibit A.
(b) During the Employment Period the Company shall pay to the
Employee compensation equal to an annual base salary (the "Base Salary") of
$200,000, payable in semi-monthly installments. The Company shall reimburse the
Employee for all expenses necessarily and reasonably incurred by the Employee in
connection with the business of the Company, against presentation of proper
receipts or other proof of expenditure, and subject to such reasonable
guidelines or limitations provided to the Employee, and which are to be applied
prospectively only as the Board of Directors of the Company may impose. The
Employee may receive such greater compensation, including incentive bonuses and
stock bonuses, as may from time to time be determined by the Board of Directors
of the Company.
3. Benefits. During the Employment Period, the Employee shall be
entitled to participate in any profit sharing plan, bonus plan, stock option or
other benefit plan, retirement plan, group life insurance plan or other
insurance plan or medical expense plan maintained by the Company for its senior
executives generally. In the event the Company does not maintain a disability
insurance plan that provides coverage for Employee, the Company agrees to
provide such coverage to Employee upon Employee's request, the cost of which
shall be deducted from Employee's compensation hereunder. The Company also
agrees to maintain Employee's split dollar life insurance policy presently
maintained by Kansas Communications, Inc.
4. Termination. The employee's employment hereunder shall terminate
upon the earlier of (a) the expiration of the Employment Period, (b) the death
of the Employee, (c) the expiration of a continuous period of 120 days during
which the Employee is unable to perform his assigned duties due to physical or
mental incapacity, (d) termination by the Company due to a material breach of
this Agreement by the Employee, or for Just Cause (as defined below), or (e)
termination by the Employee due to a material breach of this Agreement by the
Company. The exercise of the right of the Company or the Employee to terminate
this Agreement pursuant to clause (d) or (e) hereof, as the case may be, shall
not abrogate the rights and remedies of the terminating party in respect of the
breach giving rise to such termination. The Company shall only be deemed to
have materially breached this Agreement and the terms of the Employee's
employment if it fails to comply with Sections 1, 2, or 3 in all material
respects. The Employee shall only be deemed to have materially breached the
Agreement if he fails to comply with Sections 1, 5 or 6 in all material
respects. For purposes of this Agreement, "Just Cause" shall be limited to one
of the following grounds:
(i) The Employee's failure or refusal, after notice thereof and
a reasonable opportunity to cure, to perform specific directives of
the Board of Directors which are consistent with the scope and nature
of the Employee's duties and responsibilities as set forth herein; or
(ii) Dishonesty of the Employee directly or indirectly and
materially affecting the Company; or
(iii) Habitual drunkenness or use of drugs (unless medically
prescribed) which interferes with the performance of the Employee's
obligations under this Agreement; or
(iv) The Employee's conviction of a felony or of any crime
involving moral turpitude, fraud, or misrepresentation; or
(v) Any gross or willful misconduct of the Employee resulting in
loss to the Company, damage to the Company's reputation or theft or
defalcation from the Company; or
(vi) Any intentional act having the purpose and effect or
injuring the reputation, business or business relationships of the
Company; or
(vii) Gross incompetence on the part of the Employee in the
performance of the duties undertaken by the Employee under the terms
of this Agreement.
In the event of any dispute regarding the existence of the Employee's
incapacity hereunder, the matter will be resolved by the determination of a
majority of three physicians qualified to practice medicine in Kansas, one to be
selected by each of the Employee and the Board of Directors and the third to be
selected by the two designated physicians. For this purpose, the Employee will
submit to appropriate medical examinations. In the event that the Company
determines to relieve the Employee of his Employment duties for any reason other
than as stated above, then the Company shall continue to pay the Employee his
Base Salary which would otherwise be payable hereunder and shall reimburse
Employee for the costs of COBRA coverage, for the remaining Employment Period.
In the event Employee is terminated for any reason hereunder, the Company
shall assign to Employee any life insurance policies maintained by the Company
upon Employee's life, upon written request of Employee and payment by Employee
to the Company of any unexpired premiums and the cash surrender value, if any,
of such policies.
5. Covenant Not to Compete; Confidential Information.
(a) The Employee shall at all times hold in strictest confidence any
and all confidential information that may have come and may come into the
Employee's possession or within the Employee's knowledge concerning the
products, services, processes, businesses, suppliers, customers and clients of
the Company. For purposes of this Section, confidential information shall not
include information known to Employee from sources other than Softnet or
generally available to the public other than as a result of Employee's improper
disclosure thereof. The Employee agrees that neither he nor any person or
enterprise controlled by the Employee will for any reason, directly or
indirectly, for himself or any other person or enterprise, use or disclose any
trade secrets, proprietary information, inventions, manufacturing and industrial
processes and procedures, confidential information, patents, trademarks, trade
names, customer lists, service marks, service names, copyrights, applications
therefor, and license or other rights in respect thereof ("Confidential
Materials"), owned or used by, or licensed to, the Company or any of its
affiliates or otherwise relating to the Company's businesses.
(b) The Employee agrees that from the date hereof and continuing
until the Employee's employment with the Company has terminated (the "Non-
Compete Period"), neither the Employee nor any person or enterprise controlled
by the Employee will solicit for employment any person employed by the Company
at any time within one (1) year prior to the time of the act of solicitation.
(c) The Employee agrees that during the Non-Compete Period, neither
the Employee nor any person or enterprise controlled by the Employee will become
a stockholder, director, officer, agent or employee of a corporation or member
of a partnership, engage as a sole proprietor in any business, act as a
consultant to or have any financial stake of any nature in any of the foregoing
or otherwise engage directly or indirectly in any enterprise which competes with
the Company's business operations or in any other business in which the Company
is engaged on the date hereof or in which the Company is engaged as of the
termination of the Employment Period, in any area within 200 miles of any office
of the Company; provided, however, that the foregoing shall not prohibit the
ownership of capital stock of the Company or less than two percent (2%) of the
outstanding shares of the stock of any corporation engaged in any business,
which shares are regularly traded on a national securities exchange or in any
over-the-counter market.
(d) The Employee agrees that the restrictive covenants in subsections
(a) through (c) above are reasonable in their scope and duration and may be
enforced by specific performance or otherwise. The Employee shall not raise any
issue of reasonableness as a defense in any proceeding to enforce any of such
covenants. Notwithstanding the foregoing, in the event that a covenant included
in this Agreement shall be deemed by any court to be unreasonably broad in any
respect, it shall be modified in order to make it reasonable and shall be
enforced accordingly; provided, however, that in the event that a court shall
refuse to enforce any of the covenants contained in subsections (a) through (c)
above, then the unenforceable covenant shall be deemed eliminated from the
provisions of this Agreement for the purpose of those proceedings to the extent
necessary to permit the remaining covenants to be enforced so that the validity,
legality or enforceability of the remaining provisions of this Agreement shall
not be affected thereby.
6. Inventions. The Employee hereby assigns to the Company his entire
right, title and interest in all discoveries and improvements, patentable or
otherwise, trade secrets and ideas, writings and copyrightable material, which
may be conceived by the Employee or developed or acquired by him during the term
of this Agreement, which may pertain directly or indirectly to the Company's
business. The Employee agrees to promptly and fully disclose in writing all
such developments. The Employee will, upon the Company's request, execute,
acknowledge and deliver to the Company all instruments and do all other acts
which are necessary or desirable to enable the Company to file and prosecute
applications for, and to acquire, maintain and enforce all letters, patents,
trademark registrations, or copyrights in all countries.
7. Remedies. The Employee acknowledges that any material breach of this
Agreement will cause irreparable harm to the Company, difficult if not
impossible to ascertain, and that the Company shall be entitled to equitable
relief, including injunction, against any actual or threatened breach hereof,
without bond and without liability should such relief be denied, modified or
vacated. Neither the right to obtain such relief nor the obtaining of such
relief shall be exclusive of or preclude the Company from any other remedy. In
addition, the parties agree that in the event either party is found by a court
of law or equity to have breached this Agreement and relief is granted, the
breaching party shall be liable to the prevailing party for all attorneys' fees,
expert witness fees and other costs incurred by such prevailing party in such
proceeding.
8. Insurance. The Company may, at its election and for its benefit,
insure the Employee against disability, accidental loss or death (in an amount
not to exceed $1,000,000 without Employees written consent) and the Employee
shall submit to such physical examination and supply such information as may be
required in connection therewith.
9. Assignment. The rights and benefits of the Employee hereunder are not
assignable whether by voluntary or involuntary assignment or transfer. This
Agreement shall be binding upon and inure to the benefit of the successors of
the Company and shall be assignable by the Company to any entity acquiring
substantially all of the assets of the Company.
10. Notices. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing and sent by registered mail, or
overnight courier service to the Employee at his residence set forth above, or
to the Company c/o Softnet Systems, Inc., Xxx Xxxxxxxx Xxxxx, Xxxxxxxxxxxx,
Xxxxxxxx 00000, Attention: President.
11. Waiver of Breach. A waiver by the Company or the Employee of a breach
of any provision of this Agreement by the other party shall not operate or be
construed as a waiver of any subsequent breach by the other party.
12. Entire Agreement. This instrument contains the entire agreement of
the parties. It may be changed only by an agreement in writing signed by a
party against whom enforcement of any waiver, change, modification, extension or
discharge is sought.
13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal substantive laws of the State of Illinois, and the
parties hereby irrevocably and unconditionally consent and submit to the in
personam jurisdiction of Illinois courts over all matters relating to this
Agreement. Each party agrees that service of process in any action or
proceeding hereunder may be made upon such party by certified mail, return
receipt requested to the address for notice set forth herein. Each party
irrevocably waives any objection it may have to the venue of any action, suit or
proceeding brought in such courts or to the convenience of the forum and each
party irrevocably waives the right to proceed in any other jurisdiction. Final
judgment in any such action, suit or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment, a certified or true
copy of which shall be conclusive evidence of the fact and the amount of any
indebtedness or liability of any party therein described.
14. Arbitration. Any dispute between the parties arising under this
Agreement which cannot be amicably resolved between the parties, shall be
resolved by arbitration in Chicago, Illinois in accordance with the following
terms and conditions: either party may deliver a notice to all other parties
which shall set forth in detail all issues which it believes constitutes a
dispute or grievance. Within twenty (20) days of the delivery of such notice,
counsel for the parties shall mutually select as an arbitrator an attorney
practicing in Chicago, Illinois who is experienced in commercial arbitration.
If counsel for the parties are unable to agree upon the selection of this
arbitrator, the arbitrator shall be an attorney selected by the President of the
Chicago Bar Association. The Arbitrator so selected shall schedule a hearing on
the disputed issues within forty-five (45) days after his appointment, and the
arbitrator shall render his decision after the hearing, in writing as
expeditiously as is possible. Except as set forth herein, the arbitration shall
be conducted in accordance with the rules of the American Arbitration
Association, unless the parties hereto agree otherwise in writing. A default
judgment may be entered against any party who fails to appear at the arbitration
hearing. The decision of the arbitrator shall be final and unappealable and
shall be confirmed by a court in any jurisdiction designated by the prevailing
party. The arbitrator shall assess the costs of the arbitration to the parties
as he determines to be appropriate. The parties to this Agreement agree that
this paragraph has been included to resolve rapidly and inexpensively any
disputes which may arise, and that submission of a dispute to arbitration in
accordance with this Agreement paragraph shall constitute grounds for dismissal
of any action commenced by any party with respect to a dispute arising out of or
from any provisions of this Agreement, except for actions for equitable
remedies, which shall survive the submission of a dispute for arbitration.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.
SOFTNET SYSTEMS, INC.
By /s/ Xxxx Xxxxxxxx
Its President
/s/ Xxxx X. Xxxxxxxx, Xx.
Xxxx X. Xxxxxxxx, Xx.
