EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") by and between COMPU-XXXX, INC., a
Delaware corporation ("Compu-XXXX") and e. TV Commerce Inc., a Delaware
Corporation ("x.XX, and together with Compu-XXXX, the "Company") with offices at
00 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxx 00000, and Xxxx X. Theale, Jr., residing
at the address set forth in Section 3.1 ("Executive") is made and entered as of
January 8, 1999, ("Effective Date").
RECITALS
WHEREAS the Company wishes to employ the Executive, and the Executive is
willing to accept such employment for the Company on a full time basis upon the
terms and conditions hereafter set forth.
NOW THEREFORE, in consideration of the premises and of the respective
covenants and agreements contained herein, the parties hereto agree as follows:
1.1 Retention. The Company hereby retains the Executive as Executive Vice
President of Compu-XXXX and President of x.XX for and during the term hereof.
The Executive hereby accepts employment under the terms and conditions set forth
in this Agreement.
1.2 Duties of Executive. The Executive shall perform in the capacity
described in Section 1.1 hereof on a full-time basis and shall have such duties,
responsibilities, and authorities as are designated for such offices pursuant to
the Bylaws, as amended, of the Company, and as may be reasonably assigned to him
from time to time by the Chief Executive Officer of the Company. The Executive
agrees to devote his full time during normal business hours, best efforts,
abilities, knowledge and experience to the faithful performance of the duties,
responsibilities, and authorities which may be reasonably assigned to him and
which are consistent with his executive offices under Section 1.1 of this
Agreement. Notwithstanding the preceding, the Executive may, without being in
violation of his obligations hereunder, (i) serve on corporate, civic or
charitable boards or committees which are not engaged in business in the
computer software, radio or telecommunications industries, provided, however,
the Executive may serve on boards or committees otherwise prohibited hereunder
as director of a trade or business association related to the computer software,
radio or telecommunications industries with the prior written consent of the
Chief Executive Officer, (ii) invest the Executive's personal assets in such
form or manner as will not require any material services by the Executive in the
operation of the entities in which such investments are made, provided the
Executive shall use his best efforts to pursue such activities in such a manner
so that such activities shall not prevent the Executive from fulfilling his
obligations to the Company hereunder, and provided further, the Executive shall
resolve any conflict between his obligations to the Company and his obligations
to any other entity in which the Executive has a financial interest in favor of
the Company.
1
1.3 Term. This Agreement shall become effective as of the Effective Date
and shall continue in force and effect until December 31, 2001, unless sooner
terminated as provided in Section 1.6 hereof. This Agreement shall automatically
renew for additional one (1) year periods unless either party has given at least
sixty (60) days prior written notice of their intention not to renew.
1.4 Compensation. The Company (either by Compu-XXXX or x.XX) shall pay the
Executive, as full compensation for services rendered by the Executive under the
Agreement, as follows:
(a) Base Salary. The Company shall pay the Executive a base salary of
TWO HUNDRED EIGHT THOUSAND DOLLARS ($208,000.00) per year, or such higher
salary as may be determined from time to time during the term hereof either
in accordance with the provisions of Section 1.4(b) hereof or by the Board
of Directors of Compu-XXXX in its sole discretion, prorated for any partial
period of employment ("Salary"). Such Salary shall be paid by the Company
(either by Compu-XXXX or x.XX) to the Executive in twenty-six (26) equal
installments in accordance with the regular payroll payment dates of the
Company or in such installments and on such days during the month as the
Company and the Executive shall mutually determine. In the event this
agreement renews automatically as provided in paragraph 1.2 hereof
increases in base salary will be a minimum of the cumulative annual average
increase for the prior year as stated in the consumer price index all urban
consumers Jacksonville, Florida Area publicized by the U.S. Department of
Commerce. If such index is terminated or no longer in existence use of a
comparable index will be accepted.
(b) Bonus. In addition to the Salary set forth in Section 1.4(a)
hereof, the Executive shall be entitled to receive a sales and marketing
bonus (the "Bonus") to be determined by the mutual agreement of the
Compu-XXXX and the Executive which, among other things, will allow the
Executive to earn such a Bonus of up to fifty percent (50%) of the
Executive's Salary each year, based on certain performance thresholds.
1.5 Employment Benefits. In addition to the Salary, the signing bonus and
the Bonus, payable to the Executive hereunder, the Executive shall be entitled
to the following benefits upon satisfaction by the Executive of the eligibility
requirements therefor, subject to the following limitations:
(a) Sick Leave Benefits and Disability Insurance. Unless this
Agreement is terminated pursuant to the provisions of Section 1.6(b) hereof
and provided that Executive has been employed on a full time basis for a
minimum of three (3) months, the Executive shall be paid sick leave
benefits for a period of up to three (3) months at his then prevailing
Salary rate during his absence due to illness or other incapacity, reduced
by the amount, if any, of worker's compensation, social security
entitlement, or disability benefits, if any, under the Company's group
disability insurance plan, if any.
2
(b) Life Insurance;" Key Man" Life Insurance. The Company, at its own
expense, shall provide the Executive, subject to the Executive passing any
physical examination required by the Company's insurance company, life
insurance benefits under and consistent with any group term life insurance
plan which Compu-XXXX, at its election, may adopt. Any such life insurance
coverage shall be upon terms and conditions comparable to the coverage, if
any, provided other executive officers of the Company, and provided
further, however, that the Company shall not be obligated to incur a
premium of more than $1,000 per year for any such coverage. In addition,
the Company may obtain "key man" life insurance upon the life of the
Executive in an amount determined by Compu-XXXX in its sole discretion. The
Executive shall fully cooperate in obtaining said life insurance, including
submitting to any physical examination.
(c) Hospitalization, Accident, Major Medical and Dental Insurance. The
Company, at its own expense, shall provide the Executive (and all
dependents of the Executive at the request of the Executive) with group
hospitalization, group accident, major medical, and dental insurance in
amounts of coverage comparable to the coverage, if any, provided other
executive officers of the Company.
(d) Vacations. The Executive shall be entitled to a reasonable paid
vacation of not less that ten (10) business days each year during the term
of this Agreement, exclusive of national and religious holidays and
weekends, which vacation shall be taken by the Executive in accordance with
the business requirements of the Company at the time and its personnel
policies then in effect relative to this subject.
(e) Working Facilities; Travel. During the term of this Agreement, the
Company shall provide at its expense, adequate office space, furniture,
equipment, supplies, and personnel (including professional, clerical,
support and other personnel) as shall be suitable in the opinion of the
Chief Executive Officer of the Company to the Executive's position and
adequate for the Executive's use in performing his duties and
responsibilities under this Agreement. The Executive shall be based at
x.XX's office at 00000 Xxxx Xxx Xxxxxxx Xxxx, Xxxxxxxx 000, Xxxxxxxxxxxx,
Xxxxxxx or any successor office in the Jacksonville Florida area, and he
shall be required to travel to the Company's offices at 00 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxx Xxxx and to meet with customers and attend conferences,
conventions and the like from time to time in order for him to carry out
his duties hereunder.
(f) Automobile Allowance. During the term of this Agreement, the
Company shall provide the Executive with a monthly automobile allowance of
one thousand dollars ($1,000). Any allowance due the Executive pursuant to
the preceding provisions of this paragraph shall be paid by the Company
concurrently with payroll.
(g) Signing Bonus. Upon signing this Agreement in connection with the
Executive becoming Executive Vice President of Compu-XXXX and President of
x.XX and a
3
Director of the Company, Compu-XXXX shall pay to the Executive Twenty Five
Thousand Dollars ($25,000) in cash as a signing bonus, subject to any
federal, state and local withholding tax requirements.
(h) Upon signing this Agreement in connection with the Executive
becoming Executive Vice President of Compu-XXXX and President of x.XX and a
Director of the Company, Compu-XXXX shall grant to the Executive common
Stock purchase options to purchase the number of shares of common stock of
Compu-XXXX upon the terms and conditions set forth in the stock option
agreement attached hereto as Exhibit 1.5(h).
1.6 Termination. This Agreement and the Executive's employment hereunder
may be terminated without any breach of this Agreement at any time during the
term hereof only by reason of and in accordance with the following provisions:
(a) Death. If the Executive dies during the term of this Agreement and
while in the employ of the Company, this Agreement shall automatically
terminate as of the date of the Executive's death, and the Company shall
have no further liability hereunder to the Executive or his estate except
to the extent set forth in Section 1.7(a) hereof.
(b) Disability. If, during the term of this Agreement, the Executive
shall be prevented from performing his duties hereunder by reason of
becoming totally disabled as hereinafter defined for six (6) months out of
twelve (12) month period, then the Company may terminate this Agreement
immediately upon written notice to the Executive without any further
liability hereunder to the Executive except as set forth in Section 1.7(b)
hereof. For purposes of this Agreement, the Executive shall be deemed to
have become disabled when (i) he either receives "disability benefits"
under (a) Social Security, or (b) the Companys disability plan, if any
(whether funded with insurance or self-funded by the Company), or (ii) the
Board of Directors of the Company, upon the written report of a qualified
physician (after complete examination of the Executive) designated by the
Board of Directors of Compu-XXXX or its insurers, shall have determined
that the Executive has become physically and/or mentally incapable of
performing his duties under this Agreement.
(c) Termination by the Company for Cause. Prior to the expiration of
the term of this Agreement, the Company may discharge the Executive for
cause and terminate this Agreement immediately upon written notice to the
Executive without any further liability hereunder to the Executive or his
estate, except to the extent set forth in Section 1.7(c) hereof. For
purposes of this Agreement, a "discharge for cause" shall mean termination
of the Executive upon written notice to the Executive limited, however, to
one or more of the following reasons:
(1) Misappropriation or embezzlement by the Executive in
connection with the Company as determined by the affirmative unanimous
vote of the
4
Board of Directors of Compu-XXXX other than the Executive;
(2) Gross mismanagement or willful neglect of the Executive's
duties as determined by the affirmative unanimous vote of the Board of
Directors of Compu-XXXX (other than the Executive) after notice to the
Executive of the particular details thereof and a period of thirty
(30) days thereafter within which to cure such act or acts of
mismanagement or neglect, and the failure of the Executive to cure
such act or acts within such thirty (30) day period;
(3) Indictment and conviction of a felony; or
(4) Willful and unauthorized disclosure of Trade Secrets (as
defined in Section 1.8 hereof) of the Company as determined by the
affirmative unanimous vote of the Board of Directors of the Company,
other than the Executives.
(d) Termination by the Company with Notice. The Company may terminate
this Agreement, for a reason other than as set forth in subparagraphs (a),
(b), (c) or (g) of this Section 1.6 at any time immediately upon written
notice to the Executive without any further liability hereunder to the
Executive except to the extent set forth in Section 1.7(d) hereof.
(e) Termination by the Executive for Good Reason. The Executive may
terminate this Agreement at any time for Good Reason (as hereinafter
defined) in which event the Company shall have no further liability
hereunder to the Executive except to the extent set forth in Section 1.7(f)
hereof. For purposes of this Agreement, the term "Good Reason" shall mean,
without the Executive's express written consent, the occurrence of any the
following circumstances (which changes shall constitute a "Change"):
(1) The assignment to the Executive of any duties inconsistent in
any material respect (unless in the nature of a promotion) with the
Executive's position in the Company immediately prior to such Change
(including, but not limited to, the Executive's status, offices and
titles), or a significant adverse alteration or diminution in the
nature or status of the Executive's authority, duties or
responsibilities from those in effect immediately prior to such
Change, other than an isolated, insubstantial and inadvertent action
that is fully corrected within thirty (30) days after receipt of
written notice from the Executive;
(2) Any material failure by the Company to comply with any of the
provisions of Section 1.4 or 1.5 of this Agreement, other than an
isolated, insubstantial and inadvertent action that is fully corrected
within thirty (30) days after receipt of written notice from the
Executive;
5
(3) The Company's requiring the Executive to be based anywhere
other than within a reasonable travel distance from Jacksonville,
Florida, except as provided in Section 1.5(e) hereof and except for
travel reasonably required of the Executive in the performance of the
Executive's duties on behalf of the Company;
(4) The failure of the Company to obtain an agreement,
satisfactory to the Executive, from any and all successors to assume
and agree to perform this Agreement, as contemplated in Section 1.9
hereof; or
(5) Any failure by the Company to comply with any material
provision of this Agreement that has not been cured within thirty (30)
days after notice of such noncompliance has been given by the
Executive to the Company.
During a period of six (6) months immediately following any such
termination of this Agreement by the Executive, the Executive agrees to
provide such consulting services to the Company as it may reasonably
request, at such time or times within such period as may be mutually agreed
upon between the Company and the Executive. The Executive shall be
compensated for any such consulting services at a daily rate equal to one
thirtieth (1/30) of the monthly Salary paid to the Executive at the time of
the Executive's resignation from the Company, plus reimbursement for any
reasonable out-of-pocket expenses incurred by the Executive in rendering
such consulting services.
(f) Termination upon Change in Control. The Company may terminate this
Agreement at any time within twelve (12) months after a Change in Control
(as hereinafter defined) immediately upon written notice to the Executive
without any further liability hereunder to the Executive except to the
extent set forth in Section 1.7(f) hereof. For purposes of this Agreement,
the terms "Change of Control" shall mean, except in connection with, or in
relation to, a capital raising transaction:
(1) The transfer, through one transaction or a series of related
transactions, either directly or indirectly, or through one or more
intermediaries, of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Securities Exchange Act of 1934) of 25% or
more of either the then outstanding shares of common stock or the
combined voting power of Compu-DAWN's then outstanding voting
securities entitled to vote generally in the election of directors, or
the last of any series of transfers that results in the transfer of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Securities Exchange Act of 1934) of 25% or more of either
the then outstanding shares of common stock or the combined voting
power of Compu-DAWN's then outstanding voting securities entitled to
vote generally in the election of directors;
6
(2) Approval by the shareholders of Compu-XXXX of a merger or
consolidation, with respect to which persons who were the shareholders
of Compu-XXXX immediately prior to such merger or consolidation do
not, immediately thereafter, own more than 50% of the combined voting
power entitled to vote generally in the election of directors of the
merged or consolidated company's then outstanding voting securities,
or a liquidation or dissolution of the Company or the sale of all or
substantially all of the assets of the Company;
(3) The transfer, through one transaction or a series of related
transactions, of more than 50% of the assets of the Company, or the
last of any series of transfers that results in the transfer of more
than 50% of the assets of the Company. For purposes of this paragraph,
the determination of what constitutes more than 50% of the assets of
the Company shall be determined based on the most recent financial
statement prepared by the Company's independent accountants; or
(4) During any calendar year, individuals who at the beginning of
such year constituted the Board of Compu-XXXX and any new director or
directors whose election by the Board was approved by a vote of a
majority of the directors then still in office who either were
directors at the beginning of the year or whose election or nomination
for election was previously so approved, cease for any reason to
constitute a majority thereof provided, however, that this provision
will not be triggered in the event the Executive votes or causes other
stockholders to vote their shares to cause said change to the
directorship of the Company.
1.7 Compensation upon Termination.
(a) Death. In the event the Executive's employment hereunder is
terminated pursuant to the provisions of Section 1.6 (a) hereof due to the
death of the Executive, the Company shall have no further obligation to the
Executive or his estate, except to pay to the Executive's spouse, or if he
leaves no spouse, to the estate of the Executive (provided, however, that
the Executive, with the written consent of the Executive's spouse, if any,
may affirmatively designate a beneficiary other than his spouse or estate):
(i) any accrued, but unpaid, Salary, any authorized but unreimbursed
business expenses, and any vacation or sick leave benefits, which have
accrued as of the date of death, but were then unpaid or unused, (ii) any
accrued, but unpaid, Bonus but without accelerating the bonus payment date,
and (iii) an amount equal to the difference between (a) the full monthly
Salary payable hereunder as of the date of death of the Executive for a
period consisting of that number of months equal to one (1) month
multiplied by the number of full years that the Executive was an employee
of the Company or a subsidiary or a predecessor in interest thereof, and
(b) the monthly payment, if any, payable to the Executive under the
Company's salary continuation plan, if any, for the corresponding month
during the period set forth in clause (iii)(a) above. Any amount due the
Executive under clause (i) of this paragraph shall be paid in a lump sum in
cash within thirty (30) days after the death of the Executive, and any
amount due the Executive under clause (ii) of this paragraph shall be paid
in accordance with the Discretionary Bonus Resolution; provided,
7
however, that any unpaid Earnings Annual Bonus shall be paid to the
Executive within thirty (30) days after the Company's audited financial
statements for the fiscal year is made available by the Company's auditors
for which such Bonus is due.
(b) Disability. In the event the Executive's employment hereunder is
terminated pursuant to the provisions of Section 1.6(b) hereof due to the
Disability of the Executive, the Company shall be relieved of all of its
obligations under this Agreement, except to pay the Executive (i) any
accrued, but unpaid Salary, any authorized but unreimbursed business
expenses, and any vacation or sick leave benefits which have accrued as of
the date on which such permanent disability is determined, but then remain
unpaid, (ii) any accrued, but unpaid, Bonus but without accelerating the
bonus payment date, and (iii) an amount equal to the difference between (a)
the full monthly Salary payable hereunder as of the date of termination of
the Executive's employment hereunder for a period consisting of that number
of months equal to one (1) month multiplied by the number of full years
that the Executive was an employee of the Company or a subsidiary or
predecessor in interest thereof, and subject to a minimum of three (3)
months (b) the monthly payment, if any, payable to the Executive under the
Company's salary continuation plan and/or disability plan, if any, for the
corresponding month during the period set forth in clause (iii)(a) above.
The provisions of the preceding sentence shall not affect the Executive's
rights to receive payments under the Company's disability insurance plan,
if any. Any amount due the Executive under clause (i) of this paragraph
shall be paid in a lump sum in cash within thirty (30) days after the
termination of the Executive's employment hereunder, any amount due the
Executive under clause (ii) of this paragraph shall be paid in accordance
with the Discretionary Bonus Resolution; provided, however, that any unpaid
Earnings Annual Bonus shall be paid to the Executive within thirty (30)
days after the Company's audited financial statements for the fiscal year
is made available by the Company's auditors for which such Bonus is due,
and any amount due the Executive under clause (iii) of this paragraph shall
be paid in accordance with the Company's regular payroll periods during the
period set forth in clause (iii).
(c) Cause. In the event the Executive's employment hereunder is
terminated by the Company for Cause pursuant to the provisions of Section
1.6(c) hereof, the Company shall have no further obligation to the
Executive under this Agreement except to pay the Executive (i) any accrued,
but unpaid, Salary, any authorized but unreimbursed business expenses, and
any vacation or sick leave benefits, which have accrued as of the date of
termination of this Agreement, but were then unpaid or unused, and (ii) any
accrued, but unpaid, Bonus, but without accelerating the bonus payment
date. Any amount due the Executive under clause (i) of this paragraph shall
be paid in a lump sum in cash within thirty (30) days after the termination
of the Executive's employment hereunder, and any amount due the Executive
under clause (ii) of this Paragraph shall be paid within thirty (30) days
after the Company's audited financial statements for the fiscal year is
made available by the Company's auditors for which such Bonus is due.
8
(d) Termination by the Company with Notice. In the event the
Executive's employment hereunder is terminated by the Company pursuant to
the provisions of Section 1.6(d) hereof, the Executive shall be entitled to
receive (i) any accrued, but unpaid, Salary, any authorized but
unreimbursed business expenses, and any vacation or sick leave benefits
which have accrued as of the date of termination of the Agreement, but were
then unpaid or unused, (ii) any accrued, but unpaid, Bonus, and (iii) the
full monthly Salary payable hereunder for the unexpired term of the
Agreement subject to mitigation in the event the Executive has sought or
obtained employment elsewhere after the termination of the Executive's
employment pursuant to the provisions of section 1.6(d) hereof. Any amount
due the Executive under clauses (i), (ii) and (iii) of this paragraph
(other than for any Bonus) shall be paid in a lump sum in cash within
thirty (30) days after the termination of the Executive's employment
thereunder; provided, however, that any unpaid Bonus shall be paid to the
Executive within thirty (30) days after the Company's audited financial
statements for the fiscal year is made available by the Company's auditors
for which such Bonus is due.
(e) Termination by the Executive with Notice. In the event the
Executive's employment hereunder is terminated by the Executive pursuant to
the provisions of Section 1.6(e) hereof, the Executive shall be entitled to
receive (i) any accrued, but unpaid, Salary, any authorized but
unreimbursed business expenses, and any vacation or sick leave benefits
which have accrued as of the date of termination of this Agreement, but
were then unpaid or unused, and (ii) any accrued, but unpaid, Bonus. Any
amount due the Executive under clause (i) of this paragraph shall be paid
in a lump sum in cash within thirty (30) days after the termination of the
Executive's employment hereunder, and any amount due the Executive under
clause (ii) of this paragraph shall be paid to the Executive within ninety
(90) days after the end of the Company's taxable year for which such Bonus
is due. In addition, the Company may, at its option, cancel and terminate
any and all of the Executive's unexercised stock options, if any.
(f) Termination by the Executive for Good Reason.
(1) Prior to Change of Control. In the event this Agreement is
terminated by the Executive pursuant to the provisions of Section
1.6(f) hereof prior to the occurrence of a Change of Control, the
Executive shall be entitled to receive (i) any accrued, but unpaid,
Salary, any authorized but unreimbursed business expenses, and any
vacation or sick leave benefits which have accrued as of the date of
termination of the Agreement, but were then unpaid or unused, (ii) any
accrued, but unpaid Bonus, and (iii) an amount equal to One Hundred
(100%) percent of the full monthly Salary payable hereunder for the
unexpired term of the Agreement whether or not the Executive has
sought or obtained employment elsewhere after the termination of the
Executive's employment. Any amount due the Executive under clauses
(i), (ii) and (iii) of this paragraph (other than for any Bonus) shall
be paid in a lump sum in cash within thirty (30) days after the
termination of the Executive's employment hereunder; provided,
however, that any unpaid Bonus shall be paid to the Executive within
thirty (30) days after the Company's audited financial statements for
the fiscal year is made available by the Company's auditors for which
such Bonus is due. In addition, in the event this Agreement is
terminated by the Executive pursuant to the provisions of Section
1.6(f) hereof prior to
9
the occurrence of a Change of Control, the Company at its expense
shall continue to provide the Executive with the benefits set forth in
Section 1.5(b), 1.5(c) 1.5(f) and 1.5(h) above for the unexpired term
of this Agreement whether or not the Executive has sought or obtained
employment elsewhere after the termination of the Executive's
employment pursuant to the provisions of Section 1.6(f) hereof;
provided, however, if the Executive obtains employment elsewhere
during the aforesaid period, then the Company shall continue to
provide the benefits set forth in Sections 1.5(b), 1.5(c), 1.5(f) and
1.5(h) hereof only to the extent the Executive does not receive such
benefits in their entirety from the Executive's then current employer.
(2) After Change of Control. In the event this Agreement is
terminated by the Executive pursuant to the provisions of Section
1.6(f) hereof after the occurrence of a Change of Control, the
executive shall be entitled to receive (i) any accrued, but unpaid,
Salary, any authorized but unreimbursed business expenses and any
vacation or sick leave benefits which have accrued as of the date of
termination of the Agreement, but were then unpaid or unused, (ii) any
or accrued but unpaid Bonus, and (iii) an amount equal to One Hundred
(100%) percent of the full monthly Salary payable hereunder for the
unexpired term of the Agreement whether or not the Executive has
sought or obtained employment elsewhere after the termination of the
Executive's employment pursuant to the provisions of section 1.6(f)
hereof. Any amount due the Executive under clauses (i), (ii) and (iii)
of this paragraph (other than for any Bonus) shall be paid in a lump
sum in cash within thirty (30) days after the termination of the
Executive's employment hereunder; provided, however, than any unpaid
Bonus and shall be paid to the Executive within thirty (30) days after
the Company's audited financial statements for the fiscal year is made
available by the Company's auditors relating to the fiscal year for
which such Bonus is due. In addition, in the event this Agreement is
terminated by the Executive pursuant to the provisions of Section
1.6(f) hereof after the occurrence of a Change of Control, the Company
at its expense shall continue to provide the Executive with the
benefits set forth in Section 1.5(b), 1.5(c), 1.5 (f) and 1.5(h) above
for the unexpired term of this Agreement whether or not the Executive
has sought or obtained employment elsewhere after the termination of
the Executive's employment; provided, however, if the Executive
obtains employment elsewhere during the aforesaid period, then the
Company shall continue to provide the benefits set forth in Sections
1.5(b), 1.5(c), 1.5(f) and 1.5(h) hereof only to the extent the
Executive does not receive such benefits in their entirety from the
Executive's current employer.
(g) Termination by the Company After Change of Control. In the event
this Agreement is terminated by the Company pursuant to the provisions of
Section 1.6(g) hereof after the occurrence of a Change of Control, the
Executive shall be entitled to receive (i) any accrued, but unpaid, Salary,
any authorized but unreimbursed business expenses, and any vacation or sick
leave benefits which have accrued as of the date of termination of the
Agreement, but were then unpaid or unused, (ii) any accrued, but unpaid,
Bonus and (iii) an amount equal to One Hundred (100%) percent of the full
monthly Salary payable hereunder for the unexpired term of the Agreement
whether or not the Executive has sought or obtained employment elsewhere
after the termination of the Executive's employment pursuant to the
10
provisions of Section 1.6 (g) hereof. Any amount due the Executive under
clause (i) of this paragraph shall be paid in a lump sum in cash within
thirty (30) days after the termination of the Executive's employment
hereunder, any amount due to the Executive under clause (ii) of this
paragraph shall be paid to the Executive within thirty (30) days after the
Company's audited financial statements for the fiscal year is made
available by the Company's auditors for which such Bonus is due, and any
amount due the Executive under clause (iii) of this paragraph shall be paid
in a lump sum in cash within ninety (90) days after the termination of the
Executive's employment hereunder. In addition, in the event this Agreement
is terminated by the Company pursuant to the provisions of Section 1.6(g)
hereof after the occurrence of a Change of Control, the Company at its
expense shall continue to provide the Executive with the benefits set forth
in Sections 1.5(b), 1.5(c), 1.5(f) and 1.5(h) above for the unexpired term
of this Agreement whether or not the Executive has sought or obtained
employment elsewhere after the termination of the Executive's employment
pursuant to the provisions of Section 1.6(g) hereof; provided, however, if
the Executive obtains employment elsewhere during the aforesaid period,
then the Company shall continue to provide the benefits set forth in
Sections 1.5(b), 1.5(c), 1.5 (f) and 1.5(h) hereof only to the extent the
Executive does not receive such benefits in their entirety from the
Executive's then current employer.
(h) Termination of Obligations of the Company Upon Payment of
Compensation. Upon payment of the amount, if any, due the Executive
pursuant to the preceding provisions of this Section, the Company shall
have no further obligation to the Executive under this Agreement.
1.8 Protective Covenants. The Executive recognizes that his employment by
the Company is one of the highest trust and confidence because (i) the Executive
will become fully familiar with all aspects of the Company's business and that
of its subsidiaries during the period of his employment with the Company, and
(ii) certain information of which the Executive will gain knowledge during his
employment is proprietary and confidential information which is of special and
peculiar value to the Company or its subsidiaries (the "Proprietary
Information"). If any such Proprietary Information were imparted to or became
known by any person, including the Executive, engaging in a business in
competition with that of the Company or its subsidiaries, hardship, loss and
irreparable injury and damage could result to the Company or its subsidiaries,
the measurement of which would be difficult if not impossible to ascertain. The
Executive acknowledges that any and all Proprietary Information shall be the
sole and absolute property of the Company in perpetuity, that the Executive
shall promptly disclose such Proprietary Information to the Company, and the
Executive shall have no right, title or interest therein or to receive
additional monies therefor, regardless of whether development occurred during
working hours or any other time during the term of the Executive's employment
with the Company. The Executive shall assist the Company in obtaining patents on
all such Proprietary Information deemed patentable by the Company and shall
execute all documents necessary to obtain such patents and to vest the Company
with full and extensive title to the patents and to protect the patents against
infringement by others. The Executive agrees that any patent application filed
by the Executive within one (1) year after a
11
termination of the Executive's employment with the Company shall be conclusively
presumed to relate to an invention made during the term of the Executive's
employment with the Company. The Executive further acknowledges that the Company
or its subsidiaries has developed unique skills, concepts, sales presentations,
marketing programs, marketing strategy, business practices, methods of
operation, trademarks, licenses, technical information, Proprietary Information,
computer software programs, tapes and discuss concerning its operations systems,
customer lists, customer leads, documents identifying past, present and future
customers, hiring and training methods, investment policies, financial and other
confidential and proprietary information concerning its operations and expansion
plans ("Trade Secrets"). Therefore, the Executive agrees that it is necessary
for the Company to protect its business and that of its subsidiaries from such
damage, and the Executive further agrees that the following covenants constitute
a reasonable and appropriate means, consistent with the best interest of both
the Executive and the Company, to protect the Company or its subsidiaries
against such damage and shall apply to and be binding upon the Executive as
provided herein:
(a) Trade Secrets. The Executive recognizes that his position with the
Company is one of the highest trust and confidence by reason of the
Executive's access to and contact with certain Trade Secrets of the Company
and its subsidiaries. The Executive agrees and covenants to use his best
efforts and exercise utmost diligence to protect and safeguard the Trade
Secrets of the Company and its subsidiaries. The Executive further agrees
and covenants that, except as may be required by the Company in connection
with this Agreement, or with the prior written consent of the Company, the
Executive shall not, either during the term of this Agreement or
thereafter, directly or indirectly, use for the Executive's own benefit or
for the benefit of another, or disclose, disseminate, or distribute to
another, any Trade Secret (whether or not acquired, learned, obtained, or
developed by the Executive alone or in conjunction with others) of the
Company or its subsidiaries or of others with whom the Company or its
subsidiaries has a business relationship. All memoranda, notes, records,
drawings, documents, or other writings whatsoever made, compiled, acquired,
or received by the Executive during the term of this Agreement, arising out
of, in connection with, or related to any activity or business of the
Company or its subsidiaries, including, but not limited to, the customers,
suppliers, or others with whom the Company or its subsidiaries has a
business relationship, the arrangements of the Company or its subsidiaries
with such parties, and the pricing and expansion policies and strategy of
the Company or its subsidiaries, are, and shall continue to be, the sole
and exclusive property of the Company or its subsidiaries, are, and shall
continue to be, the sole and exclusive property of the Company or its
subsidiaries, as applicable, and shall, together with all copies thereof
and all advertising literature, to be returned and delivered to the Company
by the within five (5) days of the termination of this Agreement, or at any
time upon the Company's demand.
(b) Inventions as Sole Property of Company. Executive agrees promptly
to disclose to the Company any and all inventions, ideas, discoveries,
improvements, trade secrets, formulas, techniques, processes, developments,
know how, and writings or other materials, whether or not patentable and
whether or not reduced to practice, conceived, made or
12
learned by the Executive during the period of his/her employment, either
alone or jointly with others, which relate to or result from the actual or
anticipated business, work, research or investigations of the Company, or
which result, to any extent, from use of the Company's premises or property
(such inventions, ideas, discoveries, improvements, trade secrets,
formulas, techniques, processes, developments know-how, and writings or
other materials being hereinafter collectively referred to as the
"Inventions"). Executive acknowledges and agrees that all the Inventions
(including all rights of copyright therein) shall be the sole property of
the Company or any other entity designated by it, and the Executive hereby
assigns to the Company his/her entire right and interest in and to all the
Inventions. The Company or any other entity designated by it shall be the
sole owner of all domestic and foreign rights pertaining to the Inventions.
Executive further agrees as to all the Inventions to assist the Company in
every way (at the Company's expense) to obtain and from time to time
enforce patents on the Inventions in any and all countries, and to execute
all instruments and do all other things reasonable necessary or appropriate
to vest more fully in the Company all right, title and interest in and to
such Inventions. To that end, by way of illustration but not limitation,
Executive will testify in any suit or other proceeding involving any of the
Inventions, execute all documents which the Company reasonably determines
to be necessary or convenient for use in applying for and obtaining patents
thereon and enforcing same, and execute all necessary assignments thereof
to the Company or persons designated by it. Executive's obligation to
assist the Company in perfecting its rights to the Inventions shall
continue beyond the termination for the time actually spent by Executive at
the Company's request on such assistance. The Executive shall be
compensated for any such services at a daily rate equal to one thirtieth
(1/30) of the monthly Salary paid to the Executive at the time of the
Executive's termination from the Company, plus reimbursement for any
reasonable out-of-pocket expenses incurred by the Executive in rendering
such services. All inventions, if any, which Executive made prior to
his/her employment by the Company are excluded from the scope of this
Agreement. As a matter of record, Executive has set forth on Exhibit A
attached hereto a complete list of all inventions, discoveries,
improvements, writings or other materials relating to the Company's
business which have been made by Executive prior to his/her employment with
the Company. Executive represents and covenants that such list is complete.
(c) Restriction on Soliciting Certain Persons of the Company and its
Subsidiaries. The Executive covenants that during the term of this
Agreement and for a periodof twenty-four (24) months following the
termination of this Agreement, he will not, either directly or indirectly,
(i) disclose or otherwise make known to any person or entity the names and
addresses of any of the customers, suppliers, vendors, sales
representatives, distributors, employees, or consultants of the Company, or
(ii) call on, solicit, or take away, or attempt to call on, solicit or take
away any of the customers, suppliers, vendors, sales representatives,
distributors, employees, or consultants of the Company, or its subsidiaries
with whom he became acquainted during his employment with the Company,
either for himself or for any other person, firm, corporation or other
entity.
13
(d) Covenant Not to Compete. The Executive hereby covenants and agrees
that during the term of this Agreement and for a period of twelve (12)
months following the termination, of his employment hereunder, he will not
directly or indirectly, either as an employee, employer, consultant, agent,
principal, partner, shareholder (other than through ownership of public
traded capital stock of a corporation which represent less than five
percent (5%) of the outstanding capital stock of such corporation),
corporate officer, director, investor, financier or in any other individual
or representative capacity, engage or participate in any business of the
Company or any of its subsidiaries during the term of this Agreement and as
of the date of termination of the Executive's employment hereunder which is
directly competitive with the business of the Company or any of its
subsidiaries as of such date.
(e) Survival of Covenants. Each covenant of the Executive set forth in
this Section 1.8 shall survive the termination of this Agreement and shall
be construed as an agreement independent of any other provision of this
Agreement, and the existence of any claim or cause of action of the
Executive against the Company whether predicated on this Agreement or
otherwise shall not constitute a defense to the enforcement by the Company
of said covenant.
(f) Remedies. In the event of breach or threatened breach by the
Executive of any provision of this Section 1.8, the Company shall be
entitled to relief by temporary restraining order, temporary injunction, or
permanent injunction or otherwise, in addition to other legal and equitable
relief to which it may be entitled, including any and all monetary damages
which the Company may incur as a result of said breach, violation or
threatened breach or violation. The Company may pursue any remedy available
to it concurrently or consecutively in any order as to any breach,
violation, or threatened breach or violation, and the pursuit of one of
such remedies at any time will not be deemed an election of remedies or
waiver of the right to pursue any other of such remedies as to such breach,
violation, or threatened breach or violation, or as to any other breach
violation, or threatened breach or violation.
However, in the event the Company commences an action and does not
prevail, the Company shall pay the Executive all reasonable legal costs and
expenses in connection with the defense or any action brought by the
Company against him.
1.9 Merger or Acquisition. In the event the Company should consolidate, or
merge into another corporation, or transfer all or substantially all of its
assets to another entity, or divide its assets among a number of entities, this
Agreement shall continue in full force and effect. The Company will require any
and all successors (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, to expressly assume and agree pursuant to an appropriate
written assumption agreement to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such agreement
prior to the effectiveness of any such successor shall be a breach of this
Agreement and shall entitle the Executive to terminate his employment and
14
this Agreement for Good Reason. As used in this Agreement, the term "Company"
shall mean the Company as hereinbefore defined and any successor to its business
and/or assets as aforesaid which executes and delivers the assumption agreement
provided for in this Section 1.9 or which otherwise becomes bound by all the
terms and provisions of this Agreement by operation of law.
1.10 Reimbursement of Employee Expenses. The Executive is authorized to
incur ordinary, necessary and reasonable expenses in connection with the
performance of his duties and responsibilities under this Agreement and for the
promotion of the business and activities of the Company during the term hereof,
including, without limitation, expenses for necessary travel and necessary
travel and entertainment and other items of expenses required in the normal and
routine course of the Executive's employment hereunder. The Company will
reimburse the Executive from time to time for all such business expenses of at
least $500.00 per month incurred pursuant to and in conformity with the
provisions of this Section provided that the Executive presents to the Company
with respect to all expenses above $500.00 in the aggregate each month:
(a) An accounting in which the Executive recorded at or near the time
each expenditure was made; (i) the amount of the expenditures, (ii) the
time, place and designation of the type of entertainment and travel or
other expenses, or the date and description of the gift (gifts made to one
individual are not to exceed a total of Twenty-Five and No/100 Dollars
($25.00) in any taxable year); (iii) the business reason for the
expenditure and the nature of the business benefit derived or expected to
be derived as the result of the expenditure; and (iv) the names,
occupations, addresses and other information concerning each person who was
entertained or given a gift sufficient to establish the business
relationship to the Company; and
(b) Documentary evidence (such as receipts or paid bills) which state
sufficient information to establish the amount, date, place and essential
character of the expenditure, for such expenditure (i) of Twenty-Five and
No/100 Dollars ($25.00) or more except for transportation charges if not
readily available) and (ii) for lodging or traveling away from home.
2.1 Covenants of Compu-XXXX. Within ten (10) days following the execution
and delivery of this Agreement Compu-XXXX shall use its best efforts to cause
the Board of Directors to expand the Board of Directors to seven (7) and shall
cause the following persons to continue to serve as directors or to be elected
by the incumbent directors to fill vacancies caused by the increase in the size
of the Board of Directors or the resignation of certain current directors, as
the case may be, and subject to their respective consent to so serve: Xxxx
Xxxxxxxxxx, Xxxxx Xxxxx, Xxxx X. Theale, Jr., R.E. Xxxxxx IV, one person
designated by Messrs. Honigsfeld and Libin, one person designated by Messrs.
Theale and Xxxxxx, and one person mutually agreed to by Messrs. Honigsfeld,
Libin, Theale and Xxxxxx.
This covenant is subject to the stockholder's and Board of Directors rights
and duties to remove any director for cause pursuant to law, or Compu-DAWN's
certificate of incorporation and bylaws and to fulfill the directors fiduciary
duties. This covenant shall expire
15
following the next Annual Meeting of Stockholders of Compu-XXXX at which
elections for the class of directors including any of Messrs. Honigsfeld, Libin,
Theale or Xxxxxx are to be held, with respect to each of them.
GENERAL PROVISIONS
3.1 Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be deemed to have been
delivered on the date personally delivered or on the date deposited in a
receptacle maintained by the United States Postal Service for such purpose,
postage prepaid, by certified mail, return receipt requested, addressed to the
respective parties as follows:
If to the Executive:
00 Xxxxxx Xxxx
Xxxxxxxxxxxx Xxxxx, Xxxxxxx 00000
If to the Company:
Compu-Xxxx, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
ATTN: Xxxx Xxxxxxxxxx,
Chairman of the Board
Either party hereto may designate a different address by providing written
notice of such new address to the other party hereto.
3.2 Severability. If any provision contained in this Agreement is
determined to be void, illegal or unenforceable, in whole or in part, then the
other provisions contained herein shall remain in full force and effect as if
the provision which was determined to be void, illegal, or unenforceable had not
been contained herein.
3.3 Waiver, Modification, and Integration. The waiver by any party hereto
of a breach of any provision of this Agreement shall not operate or be construed
as a waiver of any subsequent breach by any party. This instrument contains the
entire agreement of the parties concerning employment and supersedes all prior
and contemporaneous representations, understandings and agreements, either oral
or in writing, between the parties hereto with respect to the employment of the
Executive by the Company and all such prior or contemporaneous representations,
understandings and agreements, both oral and written, are hereby terminated
provided, however that the terms and conditions of that separate Confidential
Proprietary Information Agreement entered into by and between the Company and
the Executive shall control with respect to the subject matter thereof. The
terms of this
16
Agreement may not be modified, altered or amended except by written agreement of
the Executive and the Company, subject to the prior approval of the Board of
Directors of the Company.
3.4 Binding Effect. This Agreement shall be binding and effective upon the
Company and its successors and permitted assigns, and upon the Executive, his
heirs and representatives.
3.5 Choice of Law and Venue. The parties agree that this Agreement is made
and entered into in Nassau County, New York and shall be governed by and
construed in accordance with the laws of the State of New York.
3.6 Representation of Executive. The Executive hereby represents and
warrants to the Company that he has not previously assumed any obligations
inconsistent with those contained in this Agreement. The Executive further
represents and warrants to the Company that the Executive has entered into this
Agreement pursuant to his own initiative and that the Company did not induce the
Executive to execute this Agreement in contravention of any existing
commitments. The Executive acknowledges that the Company has entered into this
Agreement in reliance upon the foregoing representations of the Executive.
3.7 Independent Counsel. The Company has been represented by CERTILMAN
BALIN XXXXX & XXXXX, LLP. The Executive has been represented by XXXXXX X.
XXXXXX, P.C. Each has made his or its own determination with respect to counsel
without coercion from the other. Each has thoroughly reviewed the provisions of
this Agreement and all matters concerning the consulting with the benefit of
independent counsel.
3.8 Arbitration Any controversy or claim arising out of or relating to this
Agreement shall be settled by binding arbitration in Nassau County, New York
under the rules of the American Arbitration Association. Judgment upon the award
may be entered in any court having jurisdiction. Arbitrator(s) may not award the
prevailing party in such arbitration attorney's fees, expenses and costs of
arbitration.
3.9 Counterpart Execution. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.
17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written effective as of the Effective Date.
COMPU-XXXX, INC.
By:/s/ Xxxx Xxxxxxxxxx
------------------------
XXXX XXXXXXXXXX,
Chief Executive Officer
x.XX COMMERCE, INC.
By: /s/ Xxxx Xxxxxxxxxx
-------------------------
EXECUTIVE:
/s/ Xxxx X. Theale
--------------------------
Xxxx X. Theale,
President x.XX Commerce, Inc.
Executive V.P. Compu-XXXX, Inc.
Xxxx Xxxxxxxxxx and Xxxxx Xxxxx hereby each agree that he will vote in
favor of the matters set forth in Section 2.1 of the Employment Agreement dated
January 8, 1999 between Compu-XXXX, Inc. and x.XX Commerce, Inc. and Xxxx X.
Theale, Jr.
/s/ Xxxx Xxxxxxxxxx
----------------------------
Xxxx Xxxxxxxxxx
/s/ Xxxxx Xxxxx
----------------------------
Xxxxx Xxxxx
EXHIBIT 1.5(h)
FORM OF STOCK OPTION AGREEMENT
See attached.
