Exhibit 10.85
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") dated as of August 2, 1998 between
Computone Corporation, a Delaware corporation having its principal place of
business at Suite 100, 0000 Xxxxxxxx Xxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxx 00000
(the "Employer") and Xxxxx Xxxxxxxxx, an individual residing at 00 Xxxxx Xxxxxxx
Xxxx, Xxxxxxxx, Xxxxxxxxx 00000 (the "Executive").
WITNESSETH:
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WHEREAS, the Employer desires to employ the Executive, and the Executive
desires to be employed by the Employer, all in accordance with the terms and
subject to the conditions set forth herein; and
WHEREAS, the parties are entering into this Agreement to set forth and
confirm their respective rights and obligations with respect to the Executive's
employment by the Employer;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto, intending to be legally bound hereby,
mutually agree as follows:
1. Employment and Term.
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(a) Effective on the date hereof, the Employer shall employ the
Executive, and the Executive shall be employed by the Employer, as the President
and Chief Executive Officer of the Employer (the "Position"), in accordance with
the terms and subject to the conditions set forth herein for a term (the
"Initial Term") which shall commence on the date hereof and, subject to
paragraphs 1(b) and 1(c) hereof, shall terminate, on July 31, 2001.
(b) Unless written notice in accordance with this paragraph 1
terminating the Executive's employment hereunder is given by either the Employer
or the Executive not less than 180 days in advance of the termination date of
this Agreement, this Agreement shall be automatically extended for successive
terms of one year (each, a "Renewal Term"). The Initial Term and each Renewal
Term are collectively referred to herein as the "Term," and, unless otherwise
provided herein or agreed by the parties hereto, all of the terms and conditions
of this Agreement shall continue in full force and effect throughout the Term
and, with respect to those terms and conditions that apply after the Term, after
the Term.
(c) Notwithstanding paragraph 1(b) hereof, the Employer, by action of
its Board of Directors (the "Board") and effective as specified in a written
notice thereof to the Executive in accordance with the terms hereof, shall have
the right to terminate the Executive's employment hereunder at any time during
the Term hereof, but only for Cause (as defined herein) or on account of the
Executive's death or Permanent Disability (as defined herein) as of the date of
such death or Permanent Disability.
(i) "Cause" shall mean (A) the Executive's willful and continued
failure substantially to perform his material duties with the Employer, or the
commission by the Executive of any activities constituting a violation or breach
under any material federal, state or local law or regulation applicable to the
activities of the Employer after notice thereof from the Employer to the
Executive and a reasonable opportunity for the Executive to cease such failure,
breach or violation in all material respects, (B) fraud, breach of corporate
opportunity, dishonesty, misappropriation or other intentional material damage
to the property or business of the Employer by the Executive, (C) the
Executive's habitual intoxication or drug addiction or repeated absences other
than for physical or mental impairment or illness, (D) the Executive's admission
or conviction of, or plea of nolo contendere to, any felony that, in the
reasonable judgment of the Board, adversely affects the Employer's reputation or
the Executive's ability to carry out his obligations under this Agreement or (E)
the Executive's non-compliance with the provisions of paragraphs 2(b) or 6(b)
hereof after notice thereof from the Employer to the Executive and a reasonable
opportunity for the Executive to cure such non-compliance.
(ii) "Permanent Disability" shall mean a physical or mental disability
such that the Executive is substantially unable to perform those duties that he
would otherwise be expected to continue to perform and the nonperformance of
such duties has continued for a period longer than 90 consecutive days,
provided, however, that in order to terminate the Executive's employment
hereunder on account of Permanent Disability, the Employer must provide the
Executive with written notice of the Board's good faith determination to
terminate the Executive's employment hereunder for reason of Permanent
Disability not less than 30 days prior to such termination which notice shall
specify the date of termination. Until the specified effective date of
termination by reason of Permanent Disability, the Executive shall continue to
receive compensation at the rates set forth in paragraph 3 hereof less any
payments received by the Executive pursuant to the Employer's short-term
disability insurance coverage. No termination of this Agreement because of the
Permanent Disability of the Executive shall impair any rights of the Executive
under any disability insurance policy maintained by the Employer at the
commencement of the aforesaid 90-day period.
(d) Any notice of termination of this Agreement by the Employer to the
Executive or by the Executive to the Employer shall be given in accordance with
the provisions of paragraph 10 hereof.
2. Duties of the Executive.
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(a) Subject to the ultimate control and discretion of the Board, the
Executive shall serve in the Position and perform all duties and services
commensurate with the Position. Throughout the Term, the Executive shall
perform all duties reasonably assigned or delegated to him under the By-laws of
the Employer or from time to time by the Board consistent with the Position.
Except for travel normally incidental and reasonably necessary to the business
of the Employer and the duties of the Executive hereunder, the duties of the
Executive shall be performed in the greater Atlanta, Georgia metropolitan area.
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(b) The Executive shall devote substantially all of the Executive's
business time and attention to the performance of the Executive's duties
hereunder and, during the term of his employment hereunder, the Executive shall
not engage in any other business enterprise which requires any significant
amount of the Executive's personal time or attention, unless granted the prior
permission of the Board. The foregoing provision shall not prevent the
Executive's purchase, ownership or sale of any interest in, or the Executive's
engaging (but not to exceed an average of five hours per week) in, any business
which does not compete with the business of the Employer, the Executive's taking
actions permitted by paragraph 6(b) hereof or the Executive's involvement in
charitable or community activities, provided, that the time and attention which
the Executive devotes to such business and charitable or community activities
does not materially interfere with the performance of his duties hereunder.
(c) The Executive shall be entitled to 30 business days of leave
during each calendar year with full compensation for vacation to be taken at
such time or times, as the Executive and the Employer shall mutually determine.
Unused days of vacation may not be carried over from year to year or received in
cash. Such vacation shall be separate from time devoted by the Executive to
trade shows, customer visits, seminars and other business-related activities.
3. Compensation. For all services to be rendered by the Executive
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hereunder:
(a) Base Salary. The Employer shall pay the Executive (i) a base
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salary (the "Base Salary") at an annual rate of One Hundred Fifty Thousand
Dollars ($150,000) during (A) the Initial Term and (B) each Renewal Term, (ii)
an annual bonus (the "Bonus") in such amount as is derived from the Company's
attainment of performance-related objectives, including the Employer's revenues
and net income, to be mutually determined by the Executive and the Employer and
(iii) such other compensation as may, from time to time, be determined by the
Employer in its sole discretion. Such salary and other compensation shall be
payable in accordance with the Employer's normal payroll practices as in effect
from time to time.
(b) Stock Options. Effective on the date hereof, the Employer shall
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grant the Executive options, which shall be non-qualified stock options, to
purchase an aggregate of 300,000 shares of the Employer's Common Stock with the
exercise price per share to be equal to the closing bid price of one share of
the Employer's Common Stock as reported by Nasdaq on the date of such grant.
Such options shall have the following principal terms:
(i) Such options shall become vested and become exercisable for a
period of ten years from the date hereof in installments as follows:
(A) 50,000 shares shall become vested and become
exercisable on and after the date of commencement of
your employment by the Employer;
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(B) 50,000 shares shall become vested and become
exercisable on and after the first anniversary of the
date hereof;
(C) an additional 100,000 shares shall become vested and
become exercisable on and after the second anniversary
of the date hereof; and
(D) an additional 100,000 shares shall become vested and
become exercisable on and after the third anniversary
of the date hereof;
(ii) Such options to the extent not then vested shall terminate
immediately in the event of (a) a termination of this Agreement by the Employer
for Cause or (B) the resignation of the Executive;
(iii) After such options become vested and become exercisable they
shall remain exercisable until the earlier of (A) the expiration of their term
or (B) one year after the termination of this Agreement by the Employer because
of the Executive's death or Permanent Disability; and
(iv) The Employer shall prepare and file a Form S-8 registration
statement with the Securities and Exchange Commission as promptly as practicable
after the date hereof for the purpose of registering the Common Stock of the
Employer issuable upon exercise of such options.
(C) Automobile Lease. From and after the date hereof and throughout
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the Term, the Employer shall provide the Executive with an automobile at the
Employer's sole cost and expense. Such automobile shall be leased by the
Employer and shall be a Ford Explorer or a substantially equivalent sports
utility vehicle acceptable to the Executive and shall be replaced every three
years or every 60,000 miles, whichever first occurs. The Employer shall bear
all gas, insurance, repairs, maintenance and other operating expenses for the
automobile. To the extent any of such automobile benefits are taxable to the
Executive, the Executive shall be solely responsible for such taxes.
(D) Reimbursement of Relocation Expenses. The Employer shall promptly
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reimburse the Executive for all reasonable expenses incurred by the Executive
since July 1, 1998 in establishing a residence in the greater Atlanta, Georgia
metropolitan area, including without limitation, travel, moving and relocation
expenses, but in no event in excess of $25,000 in the aggregate.
(E) Temporary Housing Allowance. The Employer agrees to provide the
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Executive with a temporary housing allowance of up to $2,500 per month for up to
three months pending the Executive's establishment of a permanent residence in
the greater Atlanta, Georgia metropolitan area.
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(F) Other Benefits. From and after the date hereof and throughout the
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Term, the compensation provided for in this paragraph 3 shall be in addition to
such rights as the Executive may have, during the Executive's employment
hereunder or thereafter, to participate in and receive benefits from or under
the Employer's medical, term life and disability insurance plans and such other
benefit plans the Employer may in its discretion establish for its employees or
executives.
4. Expenses. The Employer shall promptly reimburse the Executive for all
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reasonable expenses paid or incurred by the Executive in connection with the
performance of the Executive's duties and responsibilities hereunder, upon
presentation of expense vouchers or other appropriate documentation therefor.
5. Indemnification. The Employer shall indemnify the Executive, to the
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fullest extent permitted by law, for any and all liabilities to which the
Executive or his Estate may be subject as a result of, in connection with or
arising out of his service as an employee, an officer or a director of the
Employer hereunder or his service as an employee, officer or director of another
enterprise at the request of the Employer, as well as the costs and expenses
(including attorneys' fees) of any legal action brought or threatened to be
brought against him or the Employer as a result of, in connection with or
arising out of such employment. The Employer will advance professional fees and
disbursements to the Executive in connection with any such legal action,
provided the Executive delivers to the Employer his undertaking to repay any
expenses so advanced in the event it is ultimately determined that the Executive
is not entitled to indemnification against such expenses. Expenses reasonably
incurred by the Executive in successfully establishing the right to
indemnification or advancement of expenses, in whole or in part, pursuant to
this paragraph 5, shall also be indemnified by the Employer. The Executive
shall be entitled to the full protection of any insurance policies which the
Employer may elect to maintain generally for the benefit of their respective
directors and officers. The rights granted under this paragraph 5 shall survive
the termination of this Agreement.
6. Confidential Information.
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(a) The Executive understands that in the course of his employment by
the Employer, the Executive will receive confidential information concerning the
business of the Employer, and which the Employer desires to protect. The
Executive agrees that he will not at any time during or after the period of his
employment by the Employer reveal to anyone outside the Employer, or use for his
own benefit, any such information that has been designated as confidential by
the Employer or understood by the Executive to be confidential, without specific
written authorization by the Employer. Upon termination of this Agreement, and
upon the request of the Employer, the Executive shall promptly deliver to the
Employer any and all written materials, records and documents, including all
copies thereof, made by the Executive or coming into his possession during the
Term and retained by the Executive containing or concerning confidential
information of the Employer and all other written materials furnished to and
retained by the Executive by the Employer for his use during the Term, including
all copies thereof, whether of a confidential nature or otherwise.
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(b) During the Executive's employment with the Employer, the Executive
shall not be engaged as an officer, director or employee of, or in any way be
associated in a management or ownership capacity with, any corporation or other
entity that conducts a business in competition with the business of the Employer
during the Term, provided, however, that the Executive may own not more than
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4.99% of the outstanding securities, or equivalent equity interests, of any
class of any corporation or other entity which is in competition with the
business of the Employer, which securities are listed on a national securities
exchange or traded in the over-the-counter market.
7. Representation and Warranty of the Executive. The Executive represents
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and warrants that he is not under any obligation, contractual or otherwise, to
any other firm or corporation, which would prevent his entry into the employ of
the Employer or his performance of the terms of this Agreement.
8. Entire Agreement; Amendment. This Agreement contains the entire
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agreement between the Employer and the Executive with respect to the subject
matter hereof, and may not be amended, waived, changed, modified or discharged
except by an instrument in writing executed by the parties hereto.
9. Assignability. This Agreement shall be binding upon, and inure to the
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benefit of, the Employer and its successors and assigns hereunder. This
Agreement shall not be assignable by the Executive, but shall inure to the
benefit of the Executive's heirs, executors, administrators and legal
representatives.
10. Notice. Any notice which may be given hereunder shall be in writing
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and be deemed given when hand delivered and acknowledged or, if mailed, one day
after mailing by registered or certified mail, return receipt requested, to
either party hereto at their respective addresses stated above, or at such other
address as either party may by similar notice designate, provided that a
photocopy of such notice is dispatched at the same time as the notice is mailed.
Copies of such notices also shall be sent to the Employer's counsel, attention:
Xxxxxxxxx X. Xxxxxx, Esq., Duane, Morris & Heckscher LLP, 0000 Xxx Xxxxxxx
Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 (telecopier no.: 215-979-1213) and to
Xxxxxxx X. Xxxxxx, Chairman of the Board, c/o Pennsylvania Merchant Group, Xxxx
Xxxxx Xxxxxxxxx Xxxxxx, Xxxx Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 (telecopier no.:
610-260-6404).
11. Specific Performance. The parties agree that irreparable damage would
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occur in the event that any of the provisions of paragraph 6 hereof were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of paragraph 6 hereof and to enforce
specifically the terms and provisions of paragraph 6 hereof, this being in
addition to any other remedy to which any party is entitled at law or in equity.
12. No Third Party Beneficiaries. Nothing in this Agreement, express or
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implied, is intended to confer upon any person or entity other than the parties
(and the Executive's
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heirs, executors, administrators and legal representatives) any rights or
remedies of any nature under or by reason of this Agreement.
13. Successor Liability. The Employer shall require any subsequent
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successor, whether direct or indirect, by purchase, merger, consolidation or
otherwise, to all or substantially all of the business and/or assets of the
Employer to assume expressly and agree to perform this Agreement in the same
manner and to the same extent that the Employer would be required to perform it
if no such succession had taken place.
14. Arbitration. Any dispute which may arise between the parties hereto
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shall be submitted to binding arbitration in Atlanta, Georgia in accordance with
the Rules of the American Arbitration Association; provided that any such
dispute shall first be submitted to the Board in an effort to resolve such
dispute without resort to arbitration, and provided, further, that the Board
shall have a period of 60 days within which to respond to the Executive's
submitted dispute, and if the Board fails to respond within said time, or the
Executive's dispute is not resolved, the matter may then be submitted for
arbitration.
15. Waiver of Breach. The failure at any time to enforce or exercise any
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right under any of the provisions of this Agreement or to require at any time
performance by the other parties of any of the provisions hereof shall in no way
be construed to be a waiver of such provisions or to affect either the validity
of this Agreement or any part hereof, or the right of any party hereafter to
enforce or exercise its rights under each and every provision in accordance with
the terms of this Agreement.
16. Severability. The invalidity or unenforceability of any term, phrase,
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clause, paragraph, restriction, covenant, agreement or other provision hereof
shall in no way affect the validity or enforceability of any other provision, or
any part thereof, but this Agreement shall be construed as if such invalid or
unenforceable term, phrase, clause, paragraph, restriction, covenant, agreement
or other provision had never been contained herein unless the deletion of such
term, phrase, clause, paragraph, restriction, covenant, agreement or other
provision would result in such a material change as to cause the covenants and
agreements contained herein to be unreasonable or would materially and adversely
frustrate the objectives of the parties as expressed in this Agreement.
17. Survival of Benefits. Any provision of this Agreement which provides
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a benefit to the Executive and which by the express terms hereof does not
terminate upon the expiration of the Term shall survive the expiration of the
Term and shall remain binding upon the Employer until such time as such benefits
are paid in full to the Executive or his Estate.
18. Construction. This Agreement shall be governed by and construed in
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accordance with the internal laws of the State of Georgia, without giving effect
to principles of conflict of laws. All headings in this Agreement have been
inserted solely for convenience of reference only, are not to be considered a
part of this Agreement and shall not affect the interpretation of any of the
provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
COMPUTONE CORPORATION
By: /S/ XXXXXXX X. XXXXXX
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XXXXXXX X. XXXXXX,
CHAIRMAN OF THE BOARD
By: /S/XXXXX X. XXXXXXXXX
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XXXXX X. XXXXXXXXX
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