Exhibit 10.18
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the "Agreement") dated October 2, 1998 by and
between First Priority Group, Inc., a New York corporation with an address at 00
Xxxx Xxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 (the "Company"), and Xxxxx X.
Xxxxxxx, residing at 000 Xxxx 00xx Xxxxxx, Xxxxxxxxx 00X, Xxx Xxxx, Xxx Xxxx
00000 (the "Employee").
W I T N E S S E T H
WHEREAS, the Company desires that Employee be employed by it and render
services to it, and Employee is willing to be so employed and to render such
services to the Company, all on the terms and subject to the conditions
contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Employment
Subject to and upon the terms and conditions contained in this
Agreement, the Company hereby employs Employee, for the period set forth in
Paragraph 2 (subject to the terms and conditions of this Agreement), to render
the services to the Company, its affiliates and/or subsidiaries described in
Paragraph 3 of this Agreement.
2. Term
The Company and the Employee hereby agree to terminate the Employment
Agreement dated September 3, 1996 on the date hereof. Additionally, the Company
and the Employee agree to terminate all previously granted and unexercisable
stock options. However, the Employee shall retain the right to purchase up to
50,000 shares of Common Stock at $.75 per share pursuant to the 1995 Incentive
Stock Plan Stock Option Contract dated March 3, 1997. The Employee's term of
employment under this Agreement shall commence on July 1, 1998 (the
"Commencement Date") and shall continue for a period of thirty-six months (36)
months, terminating on June 30, 2001
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(the "Expiration Date"), unless earlier terminated under the terms and
conditions herein (the "Employment Term").
3. Duties
(a) Employee's responsibilities shall be to manage and direct
the Company's Affinity Services Division of the Company, as shall from time to
time be designated by the Chief Executive Officer ("CEO") of the Company.
Employee shall be based in Nassau or Suffolk counties during the Employment Term
and shall have the title of President of the Affinity Services Division.
(b) Employee agrees to abide by all By-Laws and policies of
the Company promulgated from time to time by the Company.
4. Exclusive-Services, Best Efforts and Acknowledgment
Employee shall devote his entire working time, attention, best efforts
and ability exclusively to the service of the Company, its affiliates and
subsidiaries during the term of this Agreement. The Company and the Employee
acknowledge that the Affinity Services Division shall only offer its services in
the form of programs that require outside parties to bear the sole cost of sales
marketing, distribution, printing and fulfillment, without the Company incurring
any such costs. The Company shall provide the service and bear the costs
associated with the benefits that are normally offered to the end users of such
affinity programs. The parties agree to develop an annual budget for the
Affinity Services Division that conforms to the program expense format set forth
above.
5. Compensation
(a) Base Salary. Commencing on the Commencement Date, the
Employee shall receive an annual salary, payable pursuant to the Company's
normal payroll procedures in place from time to time, during the Employment
Term, in the amount of One Hundred Thirty Thousand Dollars ($130,000), subject
to all required federal, state and local payroll deductions. The Employee's Base
Salary may be increased upon the recommendation of the CEO and the approval of
the Board of Directors.
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(b) Incentive Compensation. The Employee shall participate in
the Company's Corporate Compensation Program as approved and authorized by the
Board of Directors of the Company, subject to amendment by the Board of
Directors or the Compensation Committee of the Board of Directors of the
Company.
(c) The Employee shall be granted a stock option under the
Company's 1995 Incentive Stock Plan (the "Plan") with the right to purchase up
to 250,000 shares of the Company's common stock (the "Stock Option"). The Stock
Option shall be granted at a price equal to the closing price of the Company's
common stock as quoted on The Nasdaq SmallCap Stock Market on the Commencement
Date. The Stock Option shall become exercisable in one-third increments upon the
first, second and third anniversary of the Stock Option grant. The Company will
provide the Employee a Stock Option Contract for his signature which will set
out the terms of the option. This Stock Option shall be subject to the terms of
the Plan. Additionally, should a Change in Control, as hereinafter defined,
occur, only to the extent that the Company does not lose any deductions that
would be otherwise be deductible under Section 280G of the Internal Revenue
Code, the Employee's Stock Option shall become fully exercisable.
6. Business Expenses
Employee shall be reimbursed for only those business expenses incurred
by him (a) which are reasonable and necessary for Employee to perform his duties
under this Agreement in accordance with policies established from time to time
by the Company, and (b) for which Employee has submitted vouchers and/or
receipts. The Employee shall be issued a corporate credit card that he shall use
solely for business expenses which are reasonable and necessary for the Employee
to perform his duties under this Agreement in accordance with policies
established from time to time by the Company
7. Employee Benefits
During the Employment Term, Employee shall participate, to the extent
he is eligible under the terms and conditions thereof, in any health, life,
disability insurance, or 401(k) plan, or other employee benefit plans maintained
by Employer (but nothing herein shall obligate the Company to establish or
maintain any such benefit plan).
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The Employee shall be reimbursed $500 per month for a car allowance.
8. Vacation and Sick Leave
Employee shall be entitled to three (3) weeks of paid vacation per
annum during the Employment Term, to be taken at such times as may be mutually
agreed upon by the Company and Employee. The Employee shall be entitled to one
(1) week of paid sick leave per annum during the Employment Term.
9. Death and Disability
(a) The Employment Term shall terminate on the date of
Employee's death, in which event Employee's salary payable pursuant to Paragraph
5 and any accrued vacation, through the date of Employee's death, shall be paid
to his estate. Employee's estate will not be entitled to any other compensation
upon termination of this Agreement pursuant to this Paragraph 9(a).
(b) If during the Employment Term, Employee, because of
physical or mental illness or incapacity, shall become substantially unable to
perform the duties and services required of him under this Agreement for a
period of forty-five (45) consecutive days or ninety (90) days in the aggregate
in any one calendar year, the Company may, upon at least ten (10) days' prior
written notice given at any time after the expiration of such 45 or 90-day
period, as the case may be, to Employee of its intention to do so, terminate
this Agreement as of such date as may be set forth in the notice. In case of
such termination, Employee shall be entitled to receive his salary payable
pursuant to Paragraph 5 through the date of termination. Employee will not be
entitled to any other compensation upon termination of this Agreement pursuant
to this Paragraph 9(b).
10. Termination
(a) The Company may terminate the employment of Employee For
Cause (as hereinafter defined). Upon such termination, the Company shall be
released from any and all further obligations under this Agreement, except that
the Company shall be obligated to pay Employee the unpaid prorated salary
pursuant to Paragraph 5 earned
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or accrued and any other benefits normally paid and/provided to the Employee
up through the day on which Employee is terminated.
(b) The Company may terminate the employment of Employee
Without Cause (as hereinafter defined). Upon such termination, the Company shall
be released from any and all further obligations under this Agreement, except
that the Company shall be obligated to pay Employee the unpaid prorated salary
pursuant to Paragraph 5 earned or accrued and any other benefits normally paid
and/provided to the Employee up through the day on which Employee is terminated,
in addition to the lesser of (i) Base Salary and other employee benefits, as set
forth in Paragraph 7, for a twelve (12) month period from the date employment is
terminated, or (ii) the Base Salary and other employee benefits that would have
been paid the Employee from the date employment is terminated through the
Expiration Date.
(c) As used herein, the term "For Cause" shall mean:
(i) any material breach of this Agreement by Employee
that, in the case of a breach that may be cured or remedied, is not cured or
remedied to the reasonable satisfaction of the Company within 30 days after
notice is given by the Company to Employee, setting forth in reasonable detail
the nature of such breach;
(ii) Employee's failure to perform his duties and
services hereunder to the reasonable satisfaction of the CEO of the Company
that, in the case of any such failure that may be cured or remedied, is not
cured or remedied to the reasonable satisfaction of the Company within 30 days
after notice is given by the Company to Employee, setting forth in reasonable
detail the nature of such failure;
(iii) any material act, or material failure to act, by
Employee in bad faith and to the material detriment of the Company; or
(iv) commission by Employee of a material act involving
moral turpitude, dishonesty, unethical business conduct, or any other conduct
which significantly impairs the reputation of the Company, its subsidiaries or
affiliates.
(v) the conviction of the Employee of a felony, including
the plea of nolo contendere
(vi) the Affinity Services Division does not achieve
net income of at least (x) $500,000 in the year ending on December 31, 1999,
(y) $750,000 in the year ending on December 31, 2000, or (z) $1 million in the
year ending December 31, 2001.
(d) As used herein, the term "Without Cause" shall mean:
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(i) Termination by the Company of the Employee's
employment for any reason other than For Cause, Death or Disability.
11. Disclosure of Information and Restrictive Covenant
(a) Employee acknowledges that, by his employment, he has been
and will be in a confidential relationship with the Company and will have access
to confidential information and trade secrets of the Company, its subsidiaries
and affiliates, including, but not limited to, confidential information or trade
secrets belonging or relating to the Company, its subsidiaries, affiliates,
customers and/or clients or proprietary processes or procedures of the Company,
its subsidiaries, affiliates, customers and/or clients. Proprietary processes
and procedures shall include, but shall not be limited to, all information which
is known only to employees of the Company, its respective subsidiaries and
affiliates or others in a confidential relationship with the Company or its
respective subsidiaries and affiliates which relates to business matters.
Confidential information and trade secrets include, but are not limited to,
customer and client lists, price lists, marketing and sales strategies and
procedures, operational and equipment techniques, business plans and systems,
quality control procedures and systems, special projects and technological
research, including projects, research and reports for any entity or client or
any project, research, report or the like concerning sales or manufacturing or
new technology, employee compensation plans and any other information relating
thereto, and any other records, files, drawings, inventions, discoveries,
applications or processes which are not in the public domain (all the
foregoing shall be referred to herein as the "Confidential Information").
Employee agrees that in consideration of the execution of this Agreement by
the Company, he will not use, or disclose to any third party, any of the
Confidential Information, other than as required to perform his services
hereunder or as directed or authorized by the Company's Board of Directors or
President.
(b)
(i) Employee will not, at any time prior to the
Expiration Date, or if the Employee's employment shall terminate prior to the
Expiration Date, then for a period of one (1) year after the Employee ceases
to be employed by the Company, engage in or participate in any business
activity, including, but not limited to, acting as a director, officer,
employee, agent, independent contractor, partner, consultant, licensor or
licensee, franchiser or franchisee, proprietor, syndicate member, or
shareholder that
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operates a business or activity which competes with any business or activity
engaged in by the Company.
(ii) Any time during his employment by the Company or
after the Employee ceases to be employed by the Company, divulge to any
persons, firms or corporations, other than the Company (hereinafter referred
to collectively as "third parties"), or use or allow or cause or authorize any
third parties to use, any such Confidential Information; and
(iii) At any time during his employment by the
Company and for a period of one (1) year after the Employee ceases to be
employed by the Company, solicit or cause or authorize directly or indirectly
to be solicited, for or on behalf of the Employee or third parties, any
business from persons, firms, corporations or other entities who were at any
time within one (1) year prior to the cessation of his employment hereunder,
customers of the Company; and
(iv) At any time during his employment by the Company
and for a period of one (1) year after the Employee ceases to be employed by
the Company, accept or cause or authorize directly or indirectly to be
accepted, for or on behalf of the Employee or third parties, any business from
any such customers of this Company; and
(v) At any time during his employment by the Company and
for a period of one (1) year after the Employee ceases to be employed by the
Company, solicit or cause or authorize directly or indirectly to be solicited
for employment, for or on behalf of the Employee or third parties, any persons
who were at any time within one year prior to the cessation of his employment
hereunder, employees of the Company; and
(vi) At any time during his employment by the Company
and for a period of one year after the Employee ceases to be employed by the
Company, employ or cause or authorize directly or indirectly to be employed,
for or on behalf of the Employee or third parties, any such employees of the
Company; and
(vii) At any time during his employment by the
Company and for a period of one (1) year after the Employee ceases to be
employed by the Company, compete with the Company in any fashion or work for,
advise, be a consultant to or an officer, director, agent or employee of or
otherwise associate with any person, firm, corporation or other entity which
is engaged in or plans to engage in a business or activity which competes with
any business or activity engaged in by the Company, or which is under
development or in a planning stage by the Company.
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(viii) Notwithstanding anything to the contrary, the
Employee may engage in any business activity he so wishes as long as: (A) this
business activity did not directly compete with any business of the Company
prior to the Employee joining or entering into this business activity, (B) the
Employee does not assist this business activity to develop a business that
competes with any business of the Company that existed, or was in the planning
stages, at the time that the Employee's employment terminated with the
Company, or (c) the Employee shall not serve in a management capacity whereby
a subsidiary, division or business unit reports directly or indirectly to him
and engages in a business activity that competes with any business of the
Company that existed, or was in the planning stages, at the time that the
Employee's employment terminated with the Company.
(c) Employee will not induce or persuade other employees of
the Company to join him in any activity prohibited by Paragraph 11 or 12.
(d) This Paragraph 11 and Paragraph 12, 13 and 14 shall
survive the expiration or termination of the Agreement for any reason.
(e) It is expressly agreed by Employee that the nature and
scope of each of the provisions set forth in Paragraphs 11 and 12 are reasonable
and necessary. If, for any reason, any aspect of these provisions as they apply
to Employee is determined by a court of competent jurisdiction to be
unreasonable or unenforceable, the provisions shall only be modified to the
minimum extent required to make the provisions reasonable and/or enforceable,
as the case may be. Employee acknowledges and agrees that his services are of
a unique character and expressly grants to the Company or any subsidiary,
successor or assignee of the Company, the right to enforce the provisions
above through the use of all remedies available at law or in equity,
including, but not limited to, injunctive relief.
12. Company Property
(a) Any patents, inventions, discoveries, applications,
processes or designs, devised, planned, applied, created, discovered or invented
by Employee in the course of Employee's employment under this Agreement and
which pertain to any aspect of the Company's or its respective subsidiaries' or
affiliates' businesses shall be the sole and absolute property of the Company,
and Employee shall make prompt
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report thereof to the Company and promptly execute any and all documents
reasonably requested to assure the Company the full and complete ownership
thereof.
(b) All records, files, lists, including computer generated
lists, drawings, documents, equipment and similar items relating to the
Company's business which Employee shall prepare or receive from the Company
shall remain the Company's sole and exclusive property. Upon termination of the
Employment Term, or, if earlier, upon demand by the Company, Employee shall
promptly return to the Company all property of the Company in his possession.
Employee further represents that he will not copy or cause to be copied, print
out or cause to be printed out any software, documents or other materials
originating with or belonging to the Company. Employee covenants that, upon
termination of his employment with the Company, he will not retain in his
possession any such software, documents or other materials.
13. Remedy
It is mutually understood and agreed that Employee's services are
special, unique, unusual, extraordinary and of an intellectual character giving
them a peculiar value, the loss of which cannot be reasonably or adequately
compensated in damages in an action at law. Accordingly, in the event of any
breach of this Agreement by Employee, including, but not limited to, the breach
of the nondisclosure, non-solicitation and non-compete clauses under Paragraphs
11 and 12 hereof, the Company shall be entitled to equitable relief by way of
injunction or otherwise in addition to damages the Company may be entitled to
recover. Nothing herein shall be deemed to restrict any remedy available to
Employee for breach of the Agreement by the Company.
14. Representations and Warranties of Employee and the Company
(a) In order to induce the Company to enter into this
Agreement, Employee hereby represents and warrants to the Company as follows:
(i) Employee has the legal capacity and unrestricted right to execute and
deliver this Agreement once to perform all of his obligations hereunder: (ii)
the execution and delivery of this Agreement by Employee and the performance of
his obligations hereunder will not violate or be in conflict with any fiduciary
or other duty, instrument, agreement, document, arrangement or other
understanding to which Employee is a party or by
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which he is or may be bound or subject; and (iii) Employee is not a party to
any instrument, agreement, document, arrangement or other understanding with
any person (other than the Company) requiring or restricting the use or
disclosure of any confidential information or the provision of any employment,
consulting or other services.
(b) The Company hereby represents and warrants to Employee, as
follows: (i) the execution, delivery, and performance of this Agreement has been
duly authorized by all necessary corporate action of the Company; and (ii) this
Agreement constitutes the valid and binding obligation of the Company,
enforceable in accordance with its terms, except that such enforcement may be
subject to any bankruptcy, insolvency, reorganization, fraudulent transfer or
other laws, now or hereafter in effect, relating to or limiting creditors'
rights generally.
15. Notices
All notices given hereunder shall be in writing and shall be deemed
effectively given when mailed, if sent by registered or certified mail, return
receipt requested, addressed to Employee at his address set forth on the first
page of this Agreement, and to the Company at its address set forth on the first
page of this Agreement, Attention: Xxxxx Xxxxxx, Chairman of the Board, with a
copy to Xxxxx & Meritz, P.C., Xxxxx Xxxxxx Xxxxx, Xxx Xxxxx, Xxx Xxxx 00000,
Attention: Xxxxxxxx X. Xxxxx, or at such address as such party shall have
designated by a notice given in accordance with this Paragraph 15, or when
actually received by the party for whom intended, if sent by any other means.
16. Entire Agreement
This Agreement constitutes the entire understanding of the parties with
respect to its subject matter and no change, alteration or modification hereof
may be made except in writing signed by the parties hereto. Any prior or other
agreements, promises, negotiations or representations not expressly set forth in
this Agreement are of no force or effect.
17. Severability
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If any provision of this Agreement shall be unenforceable under any
applicable law, then notwithstanding such unenforceability, the remainder of
this Agreement shall continue in full force and effect.
18. Waivers, Modifications, Etc.
No amendment, modification or waiver of any provision of this Agreement
shall be effective unless the same shall be in writing and signed by each of the
parties hereto, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
19. Assignment
Neither this Agreement. nor any of Employee's rights, powers, duties or
obligations hereunder, may be assigned by Employee. This Agreement shall be
binding upon and inure to the benefit of Employee and his heirs and legal
representatives and the Company and its successors and assigns. Successors of
the Company shall include, without limitation, any corporation or corporations
acquiring, directly or indirectly, all or substantially all of the assets of the
Company, whether by merger, consolidation, purchase, lease or otherwise, and
such successor shall thereafter be deemed "the Company" for the purpose hereof.
20. Applicable Law
This Agreement shall be deemed to have been made, drafted, negotiated
and the transactions contemplated hereby consummated and fully performed in the
State of New York and shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the conflicts of law rules
thereof. Nothing contained in this Agreement shall be construed so as to require
the commission of any act contrary to law, and whenever there is any conflict
between any provision of this Agreement and any statute, law, ordinance, order
or regulation, contrary to which the parties hereto have no legal right to
contract, the latter shall prevail, but in such event any provision of this
Agreement so affected shall be curtailed and limited only to the extent
necessary to bring it within the legal requirements.
21. Jurisdiction and Venue
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It is hereby irrevocably agreed that all actions, suits or proceedings
between the Company and Employee arising out of, in connection with or relating
to this Agreement shall be exclusively heard and determined in, and the parties
do hereby irrevocably submit to the exclusive jurisdiction of, the Supreme Court
of the State of New York for Nassau or Suffolk County or the United States
District Court for the Eastern District of New York. The parties also agree that
a final judgment in any such action, suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. The parties hereby unconditionally waive any objection
which either of them may now or hereafter have to the venue of any such action,
suit or proceeding brought in any of the aforesaid courts, and waive any claim
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.
22. Full Understanding
Employee represents and agrees that he fully understands his right to
discuss all aspects of this Agreement with his private attorney, that to the
extent, if any, that he desired, he availed himself of this right, that he has
carefully read and fully understands all of the provisions of this Agreement,
that he is competent to execute this Agreement. that his agreement to execute
this Agreement has not been obtained by any duress and that he freely and
voluntarily enters into it, and that he has read this document in its entirety
and fully understands the meaning, intent and consequences of this document
which is that it constitutes an agreement of employment.
23. Definitions
A Change in Control shall have occurred if:
(a) Any person including any individual, firm,
partnership or other entity, together with all
Affiliates and Associates (as defined by ss.240.12b-2
of the regulations promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")
of such person, directly or indirectly acquires
securities of the Company's then outstanding
securities representing Twenty percent (20%) or more
of the voting securities of the Company, such person
being hereinafter referred to as an Acquiring
Person; or, but excluding:
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(i) a trustee or other fiduciary holding
securities under an employee benefit plan
of the Company or any Subsidiary of the
Company, or
(ii) a corporation owned, directly or indirectly,
by the stockholders of the Company in
substantially the same proportions as their
ownership of the Company, or
(iii) the Company or any Subsidiary of the
Company, is or becomes the Beneficial Owner
(as defined in Rule 13d-3 under the Exchange
Act),or
(iv) a person who acquires securities of the
Company directly from the Company pursuant
to a transaction that has been approved by a
vote of at least a majority of the Incumbent
Board, or
(b) Individuals who, on the date hereof, constitute the
Incumbent Board shall cease for any reason to
constitute a majority of the Board; or
(c) The stockholders of the Company approve a merger or
consolidation of the Company with any other
corporation, other than a merger or consolidation
that would result in the voting securities of the
Company outstanding immediately prior thereto
continuing to represent (either by remaining
outstanding or by being converted into voting
securities of the surviving entity) at least 80% of
the combined voting power of the voting securities
of the Company or such other surviving entity
outstanding immediately after such merger or
consolidation, or the stockholders of the Company
approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition
by the Company of all or substantially all of the
Company's assets.
4. Definitions. For the purposes of this Contract, the
following terms shall mean:
(i) "Incumbent Board" shall mean the members of
the Board, who were members of the Board
prior to the date of this Agreement.
(ii) "Subsidiary" shall mean any corporation of
which an amount of voting securities
sufficient to elect at least a majority of
the directors of such corporation is
beneficially owned, directly or indirectly,
by the Company, or is otherwise controlled
by the Company.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date written below.
FIRST PRIORITY GROUP, INC. XXXXX X. XXXXXXX
By: By:
--------------------------------- ---------------------------
Title: Dated:
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Dated:
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