Exhibit 10(h)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of
February 15, 2002, by and between HOWTEK, INC., a Delaware corporation (the
"Company"), and W. XXX XXXXXX (the "Executive") (collectively, the "Parties").
WHEREAS, the Company desires to employ Executive, and Executive desires
to be employed by the Company, upon the terms and conditions set forth herein;
and
WHEREAS, the Company is willing to employ Executive only on the
condition that Executive agrees to the non-competition and non-disclosure
covenants contained herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth herein, the parties agree as follows:
1. Employment.
1.1 Employment and Term. This Agreement shall be effective on the date
(the "Effective Date"), and only in the event, of the consummation of the
merger of Intelligent Systems Software, Inc., a Florida corporation, with and
into the Company pursuant to the Agreement and Plan of Merger dated the date of
this Agreement. Subject to the completion of the Merger, the Company hereby
agrees to employ Executive, and Executive hereby agrees to serve the Company,
on the terms and conditions set forth herein for the period commencing on the
Effective Date and expiring on the three-year anniversary of the Effective Date
(the "Term") unless sooner terminated as hereinafter set forth.
1.2 Duties of Executive. Executive shall serve as Chief Executive
Officer of the Company. Subject to the preceding sentence, during the Term,
Executive shall diligently perform all services as may be reasonably assigned to
him by the Board of Directors. Executive shall devote substantially all of his
working time and attention to the business and affairs of the Company, render
such services to the best of his ability and use his best efforts to promote the
interests of the Company. Executive may devote such reasonable amount of time as
he determines to (i) serving, with the approval of the Board of Directors, as a
director, trustee or member of any board or committee of any other organization;
or (ii) engaging in charitable and community activities; provided, however, that
such activities may not involve any conflict of interest with the interests of
the Company or interfere materially with the performance of his duties and
responsibilities under this Agreement.
1.3 Boca Raton Location. During the Term, the Company shall maintain an
office suitable for the performance of Executive's duties hereunder within 20
miles of Boca Raton, Florida, so that Executive shall not be obligated to move
his residence in order to perform his duties hereunder.
2. Compensation.
2.1 Base Salary. During the Term, the Company shall pay Executive an
annual base salary ("Base Salary") at the rate of $175,000 per year. During the
Term, the annual Base Salary may be reviewed by the Board of Directors for
possible adjustments, but shall never be less than $175,000, without the
written consent of Executive.
2.2 Annual Bonus. Executive shall be eligible to receive, for each
12-month period during the Term, an annual bonus of up to 50% of the Base
Salary ("Annual Bonus") if the Company achieves goals and objectives mutually
agreed upon in writing (or otherwise as orally agreed upon in good faith) by
the Board of Directors and Executive for each such period. Each Annual Bonus
shall be paid in a single lump sum no later than 30 days after the end of the
period for which the Annual Bonus is awarded. In the event of the acquisition
of the Company or the sale of substantially all of the assets of the Company
("Sale of the Company"), the Company agrees to pay Executive, in a lump sum at
the closing of the Sale of the Company, all amounts of Annual Bonus which could
thereafter become payable hereunder.
2.3 Stock Options. The Company agrees to grant Executive options to
purchase 600,000 shares of its common stock at an exercise price per share
equal to the closing price of the Company's common stock on the trading day
immediately preceding the date of this Agreement. The options will become
effective and be fully vested on the Effective Date and shall expire on the
10-year anniversary of the Effective Date. The options shall not be subject to
forfeiture for any reason, including, without limitation, in the event
Executive is terminated or otherwise leaves the employ of the Company for any
reason.
3. Expense Reimbursement and Other Benefits.
3.1 Expense Reimbursement. During the Term, the Company, upon the
submission of supporting documentation by Executive, shall promptly reimburse
Executive for all reasonable expenses actually paid or incurred by Executive in
the course of and pursuant to the business of the Company.
3.2 Vacation. During the Term, Executive shall be entitled to four
weeks' paid vacation per year, provided that no vacation period may exceed 10
consecutive business days.
3.3 Automobile Allowance. During the Term, the Company shall pay
Executive an automobile allowance at the rate of $800 per month, payable on the
first day of each month.
3.4 Other Benefits. The Company shall provide Executive such benefits
as are generally provided to other senior executives of the Company.
4. Termination.
4.1 Termination for Cause. Notwithstanding anything contained to the
contrary in this Agreement, this Agreement may be terminated by the Company for
Cause. As used in this Agreement, "Cause" shall only mean (i) any action or
omission of Executive which constitutes a material breach of this Agreement
which is not cured within ten business days after receipt by Executive of
notice of same; (ii) a breach of Section 5 of this Agreement which is not cured
within ten business days after receipt by Executive of notice of same; (iii)
Executive's substantial failure to duly perform his duties hereunder; (iv)
theft, fraud, embezzlement or misappropriation of the Company's assets or
properties by Executive; (v) the conviction of Executive for any criminal act
which is a felony; or (vi) Executive's repeated substantial abuse of alcohol or
illegal drugs. Upon any termination pursuant to this Section 4.1, the Company
shall have no further liability to Executive hereunder other than reimbursement
of expenses duly incurred through the date of termination.
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4.2 Disability. Notwithstanding anything contained in this Agreement to
the contrary, the Company, by written notice to Executive, shall at all times
have the right to terminate this Agreement, and Executive's employment
hereunder, if Executive shall, as the result of mental or physical incapacity,
illness or disability, fail or be unable to perform his duties and
responsibilities provided for herein for a period of more than 120 days in any
nine-month period (a "Permanent Disability"). Upon any termination pursuant to
this Section 4.2, the Company shall have no further liability to Executive
hereunder other than (i) payment to Executive of Base Salary earned as of the
date of termination, (ii) the portion of Annual Bonus which Executive earned
prior to the date on which the Permanent Disability occurred and (iii)
reimbursement of expenses duly incurred through the date of termination.
4.3 Death. In the event of the death of Executive during the Term, the
Company shall have no further liability to Executive's estate hereunder other
than (i) payment of Base Salary earned as of the date of death, (ii) the Annual
Bonus which Executive could have earned for the period in which the date of
death occurred and (iii) reimbursement of expenses duly incurred through the
date of death.
4.4 Termination Without Cause. Notwithstanding anything contained
herein to the contrary, at any time the Company shall have the right to
terminate Executive's employment hereunder without Cause by written notice to
Executive. Upon any termination pursuant to this Section 4.4, the Company shall
pay Executive (i) Base Salary (at the annual rate in effect on the date of
termination) through the end of the original three-year Term, (ii) the amount
of all Annual Bonuses which Executive could have earned through the end of the
original three-year Term and (iii) expenses duly incurred through the date of
termination. Payments under clauses (i) and (ii) of the preceding sentence
shall be made in 12 monthly installments, beginning on the 15th business day
following the date of termination. In addition, the Company shall continue to
provide Executive the benefits provided to other senior executives of the
Company through the end of the Term. The Company shall be deemed to have
terminated Executive's employment pursuant to this Section 4.4 if such
employment is terminated by Executive voluntarily as a result of the occurrence
of any of the following events which is not consented to in writing by
Executive prior to its occurrence or which is not cured by the Company within
ten days after its receipt of written notice of Executive's objection to the
occurrence: (a) Executive is assigned to any position, duties or
responsibilities that are significantly diminished from those contemplated by
this Agreement; or (b) Executive is requested to engage in conduct that is
reasonably likely to result in a violation of law.
4.5 Notice. Executive and the Company each agree to give the other 30
days' prior written notice of resignation or termination.
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5. Non-Competition and Non-Disclosure Covenants.
5.1 Non-Competition. From the date hereof through (i) the second
anniversary date of any termination with Cause of Executive's employment with
the Company or of Executive's resignation or (ii) the first anniversary date of
any termination of Executive's employment with the Company by the Company
without Cause or by Executive for Good Reason, Executive agrees not to engage,
have an interest in or render any services to, directly or indirectly, in any
aspect of the any business which offers products or services similar to or
competitive with products and services offered by the Company during the Term
in the markets and territories in which the Company's products and services are
offered during the Term (the "Business"), whether as executive, partner,
director, employee, agent, consultant, shareholder, owner, manager, operator,
licensor, licensee, joint venturer or otherwise; provided that Executive may
hold shares constituting less than 1% of the outstanding shares of a publicly
traded company in the Business.
Executive shall not, during the Term and for a period of two years
thereafter, directly or indirectly, take any action which constitutes an
interference with or a disruption of any of the Company's business activities.
For purposes of clarification, but not of limitation, Executive hereby
acknowledges and agrees that the provisions of this Section 5.1 shall serve as
a prohibition against him from, during the period referred to therein, directly
or indirectly, hiring, offering to hire, enticing, soliciting or in any other
manner persuading or attempting to persuade any officer, employee, agent,
lessor, lessee, licensor, licensee or customer of the Company (but only those
suppliers existing during the time of Executive's employment by the Company, or
at the termination of his employment), to discontinue or alter his, her or its
relationship with the Company.
5.2 Non-Disclosure. From the date hereof through the fifth anniversary
date of termination of Executive's employment with the Company, Executive
agrees to (i) hold all trade secrets, business plans and other confidential or
proprietary information of the Company in trust and confidence for the Company
and shall not use or disclose any such information to any person under any
circumstances and (ii) be liable for damages incurred by the Company as a
result of disclosure of any such information by Executive (without the prior
written consent of the Company) for any purpose at any time after the date
hereof. Notwithstanding the foregoing, Executive may disclose any such
information to the extent such disclosure is compelled by a subpoena issued
under applicable law or to the extent such information becomes publicly
available other than by unauthorized disclosure by Executive.
5.3 Right to Injunction. In the event Executive breaches any of the
covenants contained in this Section 5, Executive acknowledges that the
Company's remedy at law for damages will be inadequate and that the Company
will be entitled to an injunction to prevent Executive's prospective or
continuing breach and to maintain the status quo pending arbitration as
provided in this Agreement. The Company's application to a court of law for an
injunction will not constitute a waiver by the Company of its right to
arbitration as provided in Section 11 of this Agreement. Executive further
agrees that any court of law which issues an injunction shall refer any claim
for damages to arbitration as provided in Section 11 of this Agreement.
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6. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida.
7. Notices.
Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been given when
delivered by hand or by overnight courier service addressed as follows:
If to the Company: Howtek, Inc.
00 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxxxxxxx 00000
Attention: Chairman of the Board
with a copy to: Blank Rome LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
if to Executive: W. Xxx Xxxxxx
00000 Xxxxxxxxx Xxx
Xxxx Xxxxx, Xxxxxxx 00000
or to such other addresses as either party hereto may from time to time give
notice of to the other in the aforesaid manner.
8. Benefits; Binding Effect.
This Agreement shall be for the benefit of and binding upon the parties
hereto and their respective heirs, personal representatives, legal
representatives, successors and, where applicable, assigns. Notwithstanding the
foregoing, neither party may assign its rights or benefits hereunder without
the prior written consent of the other party hereto.
9. Severability.
The invalidity of any one or more of the words, phrases, sentences,
clauses or sections contained in this Agreement shall not affect the
enforceability of the remaining portions of this Agreement or any part thereof,
all of which are inserted conditionally on their being valid in law and, in the
event that any one or more of the words, phrases, sentences, clauses or
sections contained in this Agreement shall be declared invalid, this Agreement
shall be construed as if such invalid word or words, phrase or phrases,
sentence or sentences, clause or clauses, or section or sections had not been
inserted. If such invalidity is caused by length of time or size of area, or
both, the otherwise invalid provision will be considered to be reduced to a
period or area which would cure such invalidity.
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10. Waivers.
The waiver by either party hereto of a breach or violation of any term
or provision of this Agreement shall not operate nor be construed as a waiver
of any subsequent breach or violation.
11. Arbitration.
The Company and Executive mutually consent to the resolution by
arbitration, in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association, of all claims or
controversies arising out of Executive's employment (or its termination) that
the Company may have against the Executive or that the Executive may have
against the Company or against its officers, directors, shareholders, employees
or agents in their capacity as such other than a claim which is primarily for
an injunction or other equitable relief. The arbitration shall take place in
Palm Beach County, Florida. The Company and Executive shall equally share the
fees and costs of the arbitrator, and each party shall bear its own costs in
connection with any arbitration, unless either party shall prevail in an
arbitration proceeding as to any material issue, in which case the other party
shall reimburse the prevailing party for all reasonable costs, expenses and
fees incurred in connection with such arbitration. Notwithstanding the
foregoing, this Section 11 shall not be deemed a waiver of the Company's right
to injunctive relief as provided for in Section 5.3 of this Agreement.
12. No Third-Party Beneficiary.
Nothing expressed or implied in this Agreement is intended, or shall be
construed, to confer upon or give any person (other than the parties hereto
and, in the case of Executive, his heirs, personal representatives and/or legal
representative) any rights or remedies under or by reason of this Agreement.
13. Survival.
Notwithstanding the termination of this Agreement by Company for Cause
under Section 4.1, for disability under Section 4.2 or otherwise, Executive's
obligations under Sections 5 through 14 hereof shall survive and remain in full
force and effect for the periods therein provided, and the provisions for
equitable relief against the Executive in Section 5 hereof shall continue in
force.
14. Entire Agreement.
This Agreement represents the entire understanding and agreement
between the parties with respect to the subject matter hereof, and supersedes
all other agreements, negotiations, understandings and representations (if any)
between such parties with respect to the subject matter hereof.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the undersigned have executed this
Employment Agreement as of the date first above written.
Howtek, Inc.
By /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Chief Financial Officer
/s/ W. Xxx Xxxxxx
----------------------------------------
W. Xxx Xxxxxx
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