Exhibit 10.11
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT dated as of the 1st day of July, 2004 by and
between NETWOLVES CORPORATION, a New York corporation (hereinafter the
"Company") and Xxxxx X. Xxxxxx, an individual residing at 00000 Xxxxxx Xxxxx,
Xxxxx, Xxxxxxx 00000 (hereinafter called "Castle").
W I T N E S S E T H:
WHEREAS, the Company desires to enter into an Employment Agreement with
Castle; and
WHEREAS, Castle desires to enter into an Employment Agreement with the
Company;
NOW, THEREFORE, it is agreed as follows:
1. Prior Agreements Superseded. This Agreement supersedes any employment,
consulting or other agreements, oral or written, entered into between Castle and
the Company prior to the date of this Agreement except for equity awards
previously granted to Castle, which stock options shall continue in full force
and effect.
2. Employment. The Company hereby agrees to employ Castle and Castle hereby
agrees to serve as Chief Financial Officer of the Company with commensurate
responsibilities and to perform such services as directed by the Board of
Directors. Castle's employment hereunder shall be on a full-time basis and
Castle shall not engage in any other business, except with the prior approval of
the Board of Directors of the Company. Castle shall serve in similar capacities
of such of the subsidiary corporations of the Company as may be selected by the
Board of Directors without additional compensation. Notwithstanding the
foregoing, it is understood that the duties of Castle during the performance of
employment shall not be inconsistent with his position and title as Chief
Financial Officer of the Company.
3. Term. Subject to earlier termination on the terms and conditions
hereinafter provided, the term of this Employment Agreement shall end on June
30, 2009, provided that this agreement shall extend for additional one-year
periods unless Castle receives written notice from the Company each year on or
before April 1 of said year that the Company will be terminating the agreement.
In no event, however, shall this agreement extend beyond June 30, 2011.
4. Compensation. For all services rendered by Castle under this Agreement,
compensation shall be paid to Castle as follows:
(a) Castle shall be paid at the annual rate of One Hundred Seventy-Five
Thousand ($175,000) Dollars. (b) During the period of employment Castle shall be
eligible to participate in the Company's stock option and stock purchase plans
to the extent determined in the discretion of the Board of Directors of the
Company or committee thereof.
(c) Castle shall be entitled to participate in any short-term or long-term
incentive plan which the Company has in existence or which may be adopted.
(d) During the period of employment, Castle shall be furnished with office
space and secretarial service and facilities commensurate with his position and
adequate for the performance of his duties.
(e) Castle shall be entitled to fully participate in all benefit programs
available to executive employees of the Company throughout the term of this
Agreement.
(f) Castle shall be entitled to four (4) weeks of vacation and sick leaves
consistent with current practice of the Company.
5. Expenses. Castle shall be reimbursed for all out-of-pocket expenses,
including medical expenses, reasonably incurred by him in the performance of his
duties hereunder. Expense reports, with receipts and justifications, must be
submitted to the Chairman of the Board for approval.
6. Severance Benefits. Castle shall be entitled to the severance benefits
provided for in subsection (c) hereof in the event of the termination of his
employment by the Company without cause or in the event of a voluntary
termination of employment by Castle for good reason. In such event, Castle shall
have no duty to mitigate damages hereunder. Castle and the Company acknowledge
that the foregoing provisions of this paragraph 6 are reasonable and are based
upon the facts and circumstances of the parties at the time of entering into
this Agreement, and with this Agreement, and with due regard to future
expectations.
(a) The term "cause" shall mean:
(i) Castle's willful and continued failure to substantially perform his
duties under this Agreement (other than any such failure resulting from his
incapacity due to physical or mental illness) after demand for substantial
performance is delivered to Castle by the Chairman of the Board of the Company
which specifically identifies the manner in which the Board believes Castle has
not substantially performed his duties.
(ii) Castle's failure to refuse to follow directions from the Company's
Board of Directors provided that (a) Castle is provided written notice of such
directions and a reasonable period in which to comply and (b) Castle's
compliance with any such direction would not be illegal or unlawful.
(iii) Any act or fraud, embezzlement or theft committed by Castle whether
or not in connection with his duties or in the course of his employment which
substantially impairs his ability to perform his duties hereunder.
(iv) Any willful disclosure by Castle of confidential information or trade
secrets of the Company or its affiliates.
For purposes of this paragraph, no act or failure to act on Castle's part
shall be considered "willful" unless done, or omitted to be done, by Castle not
in good faith and without reasonable belief that his action or omission was in
the best interest of the Company. Notwithstanding the foregoing, Castle shall
not be deemed to have been terminated for cause unless and until there shall
have been delivered to him a copy of a notice of termination from the Chairman
of the Board of the Company after reasonable notice to Castle and an opportunity
for Castle with his counsel to be heard before the Board of Directors of the
Company finding that in the good faith opinion of such Board of Directors Castle
was guilty of the conduct set forth in clauses (i), (ii) or (iii) of this
paragraph and specifying the particulars thereof in detail.
(b) For these purposes, Castle shall have "good reason" to terminate this
Agreement if:
(i) the Company removes Castle from the position of Chief Financial Officer
at any time during the term of this Agreement;
(ii) Castle's place of employment is moved beyond a fifty-mile radius from
the Company's current facility in Tampa, Florida; or
(iii) there is a change of control as defined in Section 14 hereof.
(c) The severance benefits under this section in the event of termination
without cause or by Castle for "good reason", shall consist of the continued
payment to Castle for the remaining term of this Agreement, of the annual salary
provided in Section 4(a) hereof plus the immediate vesting of all outstanding
options.
7. Death. In the event of Castle's death during the term of this Agreement,
Castle's legal representative shall be entitled to receive his per annum base
salary as provided in paragraph 4(a) of this Agreement to the last day of the
calendar quarter following the calendar quarter in which Castle's death shall
have occurred and thereafter to receive one-half (1/2) of the base salary
provided in paragraph 4(a) of this Agreement for the balance of the period
covered by this Employment Agreement.
8. Non-Competition.
(a) Castle agrees that, during the term of this Agreement, he will not,
without the prior written approval of the Board of Directors of the Company,
directly or indirectly, through any other individual or entity, (a) become an
officer or employee of, or render any services [including consulting services]
to, any competitor of the Company, which shall be define as any business engaged
in Internet Security, (b) solicit, raid, entice or induce any customer of the
Company to cease purchasing goods or services from the Company or to become a
customer of any competitor of the Company, and Castle will not approach any
customer for any such purpose or authorize the taking of any such actions by any
other individual or entity, or (c) solicit, raid, entice or induce any employee
of the Company, and Castle will not approach any such employee for any such
purpose or authorize the taking of any such action by any other individual or
entity. However, nothing contained in this paragraph 8 shall be construed as
preventing Castle from investing his assets in such form or manner as will not
require him to become an officer or employee of, or render any services
(including consulting services) to, any competitor of the Company.
(b) During the term hereof and at all times thereafter, Castle shall not
disclose to any person, firm or corporation other than the Company any trade
secrets, trade information, techniques or other confidential information of the
business of the Company, its methods of doing business or information concerning
its customers learned or acquired by Castle during Castle's relationship with
the Company and shall not engage in any unfair trade practices with respect to
the Company.
9. Enforcement.
(a) The necessity for protection of the Company and its subsidiaries
against Castle's competition, as well as the nature and scope of such
protection, has been carefully considered by the parties hereto in light of the
uniqueness of Castle's talent and his importance to the Company. Accordingly,
Castle agrees that, in addition to any other relief to which the Company may be
entitled, the Company shall be entitled to seek and obtain injunctive relief
(without the requirement of any bond) for the purpose of restraining Castle from
any actual or threatened breach of the covenants contained in paragraph 8 of
this Agreement.
(b) If for any reason a court determines that the restrictions under
paragraph 8 of this Agreement are not reasonable or that consideration therefor
in adequate, the parties expressly agree and covenant that such restrictions
shall be interpreted, modified or rewritten by such court to include as much of
the duration and scope identified in paragraph 8 as will render the restrictions
valid and enforceable.
10. Notices. Any notice to be given to the Company or Castle hereunder
shall be deemed given if delivered personally, telefaxed or mailed by certified
or registered mail, postage prepaid, to the other party hereto at the following
addresses:
To the Company: NetWolves Corporation
0000 Xxxxxxxxxx Xxxx. Xxxxx 000
Xxxxx, Xxxxxxx 00000
Copy to: Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxx, Xxxxxxxxx & Xxxxxxxx, LLP
000 Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
To Castle: Xxxxx X. Xxxxxx
00000 Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
Either party may change the address to which notice may be given hereunder by
giving notice to the other party as provided herein.
11. Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the Company, its successors and assigns, and upon Castle,
his heirs, executors, administrators and legal representatives.
12. Entire Agreement. This Agreement constitutes the entire agreement
between the parties except as specifically otherwise indicated herein.
13. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of New York.
14. Change of Control. "Change in Control" shall mean the occurrence of any
of the following events:
(i) the acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 as
amended (the "Exchange Act") (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of voting securities
of the Company when such acquisition causes such Person to own 30 percent or
more of the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for purposes
of this subsection (i), the following acquisitions shall not be deemed to result
in a Change of Control: (A) any acquisition directly from the Company, (B) any
acquisition by the Company, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (D) any acquisition pursuant to a transaction that
complies with clauses (A), (B) and (C) of subsection (iii) below; and provided,
further, that if any Person's beneficial ownership of the Outstanding Company
Voting Securities reaches or exceeds 30 percent as a result of a transaction
described in clause (A) or (B) above, and such Person subsequently acquires
beneficial ownership of additional voting securities of the Company, such
subsequent acquisition shall be treated as an acquisition that causes such
Person to own 30 percent or more of the Outstanding Company Voting Securities;
or
(ii) individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding for this purpose
any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(iii) consummation of a reorganization, merger or consolidation or sale or
other disposition of all or subsequently all of the assets of the Company or the
acquisition of assets of another entity ("Business Combination"); excluding,
however, such a Business Combination pursuant to which (A) all or substantially
all of the individuals and entities who were the beneficial owners of the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 60 percent of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation that as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Voting
Securities, (B) no Person (excluding any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 30 percent or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (C) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(iv) approval by the stockholders of the Company of a complete liquidation
or dissolution of the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement as of the day and year first above written.
NETWOLVES CORPORATION
By: /s/ Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Chairman of the Board
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Employee
