EXHIBIT 10.24
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into as of this 31st
day of December, 2001, by and between XXXXXX XXXXX, an individual resident of
the State of Georgia ("Employee"), and INNOTRAC CORPORATION, a Georgia
corporation (the "Employer").
WITNESSETH:
WHEREAS, the parties hereto desire to enter into an agreement for the
Company's continued employment of Employee on the terms and conditions
contained herein;
NOW, THEREFORE, in consideration of the premises and the mutual
promises and agreements contained herein, the parties hereto, intending to be
legally bound, hereby agree as follows:
Section 1. Employment.
Subject to the terms hereof, the Employer hereby employs Employee, and
Employee hereby accepts such employment. Employee will serve as Vice President
Logistics of the Employer or in such other executive capacity as the Board of
Directors of Employer (the "Board of Directors") may hereafter from time to
time determine. Employee agrees to devote his full business time and best
efforts to the performance of the duties that Employer may assign Employee from
time to time; provided that the Employee may also serve as an officer of any
subsidiary of the Employer, and may perform services for any subsidiary of the
Employer, as directed from time to time by the Board of Directors or the Chief
Executive Officer, President or Chief Operating Officer.
Section 2. Term of Employment.
The term of Employee's employment (the "Term") shall commence on
January 1, 2002 and shall continue from such date until the earlier of (a)
January 1, 2005 or (b) the occurrence of any of the following events:
(i) The death or total disability of Employee (total
disability meaning the failure to fully perform his normal required
services hereunder for a period of three (3) months during any
consecutive twelve (12) month period during the term hereof, as
determined by the Board of Directors, by reason of mental or physical
disability);
(ii) The termination by Employer of Employee's employment
hereunder, upon prior written notice to Employee, for "good cause", as
determined by the Board of Directors. For purposes of this Agreement,
"good cause" for termination of Employee's employment shall exist (A)
if Employee is convicted of, pleads guilty to, or confesses to any
felony or any act of fraud, misappropriation or embezzlement, (B) if
Employee fails to comply with the terms of this Agreement, and, within
thirty (30) days after written notice from Employer of such failure,
Employee has not corrected such failure or, having once received such
notice of failure and having so corrected such failure, Employee at
any time thereafter again so fails, (C) if Employee violates any of
the provisions contained in Section 4 of this Agreement, or (D) if
Employee tests positive for illegal drugs; or
(iii) The termination of this Agreement by either party
upon at least ninety (90) days prior written notice.
Section 3. Compensation.
3.1 Term of Employment. Employer will provide Employee with the
following salary, expense reimbursement and additional employee benefits during
the term of employment hereunder:
(a) Salary. Employee will be paid a salary (the "Salary")
of no less than One Hundred Eighty-Five Thousand Dollars ($185,000) per
annum, less deductions and withholdings required by applicable law. The
Salary shall be paid to Employee in equal monthly installments (or on
such more frequent basis as other executives of Employer are
compensated). The Salary shall be reviewed by the Board of Directors,
Chief Executive Officer, President or Chief Operating Officer of
Employer on at least an annual basis.
(b) Bonus. Employee will be entitled to a maximum annual
bonus (the "Bonus") of 50% of Salary. The Bonus shall be determined
and paid as provided in the Plan Rules adopted from time to time
pursuant to the Employer's Senior Executive Incentive Compensation
Plan, or any successor plan thereto.
(c) Vacation. Employee shall receive four (4) weeks
vacation time per calendar year during the term of this Agreement. Any
unused vacation days in any calendar year may not be carried over to
subsequent years.
(d) Expenses. Employer shall reimburse Employee for all
reasonable and necessary expenses incurred by Employee at the request
of and on behalf of Employer.
(e) Benefit Plans. Employee may participate in such
medical, dental, disability, hospitalization, life insurance and other
benefit plans (such as pension and profit sharing plans) as Employer
maintains from time to time for the benefit of other senior executives
of Employer, on the terms and subject to the conditions set forth in
such plans.
3.2 Effect of Termination.
(a) Except as hereinafter provided, upon the termination
of the employment of Employee hereunder for any reason, Employee shall
be entitled to all compensation and benefits earned or accrued under
Section 3.1 as of the effective date of termination (the "Termination
Date"), but from and after the Termination Date no additional
compensation or benefits shall be earned by Employee hereunder.
Employee shall be deemed to have earned any Bonus payable with respect
to the calendar year in which the Termination Date occurs on a
prorated basis (based on the number of days in such
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calendar year through and including the Termination Date divided by
365) based upon the year to date financials and performance of the
Employer and assuming performance at the target level for any
individual performance criteria. Any such Bonus shall be payable upon
termination.
(b) If Employee's employment hereunder is terminated by
Employer pursuant to Section 2(b)(iii) hereof, then, in addition to
any other amount payable hereunder, Employer shall continue to pay
Employee his normal Salary pursuant to Section 3.1 (a) for a six-month
period (on the same basis as if Employee continued to serve as an
employee hereunder for such applicable period). Except as provided in
Section 3.3, in the case of a termination by Employer pursuant to
Section 2(b)(iii) hereof, the options will expire on the first
anniversary after the effective date of the termination of Employee's
employment hereunder. Upon the death of Employee, any options that
Employee would otherwise be entitled to exercise hereunder may be
exercised by his personal representatives or heirs, as applicable.
Except as provided in Section 3.3, if Employee's employment is
terminated by Employer pursuant to Section 2(b)(ii) or by Employee
pursuant to Section 2(b)(iii), those options which are exercisable as
of the date of such termination shall be exercisable for a period of
90 days after such termination (and all other options not then
exercisable shall be forfeited as of such date), and after such 90-day
period, all unexercised options will expire. To the extent necessary,
this provision shall be deemed an amendment of any option agreement
between the Employee and the Employer or an affiliate of the Employer.
3.3 Effect of Change in Control. Notwithstanding Section 3.2(b)
above, if there is a Change in Control (as defined below) of the Employer and
the Employee's employment is terminated within six (6) months following the
date of the Change in Control, the following provisions shall apply.
(a) If Employee's employment hereunder is terminated by
Employer pursuant to Section 2(b)(iii) hereof or by Employee for "Good
Reason" as defined below, then, in addition to any other amount
payable pursuant to Section 3.2(a), the Employee shall be entitled to
received the compensation and benefits set forth in subsections (i)
through (iii) below:
(i) Base Salary. Employee will continue to
receive his Salary as then in effect (subject to withholding
of all applicable taxes) for a period of six (6) months from
his date of termination in the same manner as it was being
paid as of the date of termination.
(ii) Health, Dental and Life Insurance Coverage.
The health, dental and group term life insurance benefits
coverage provided to Employee at his date of termination
shall be continued at the same level and in the same manner
as if his employment under this Agreement had not terminated
(subject to the customary changes in such coverages if
Employee retires, reaches age 65 or similar events),
beginning on the date of such termination and ending on the
date six (6) months from the date of such termination. Any
additional coverages Employee had at termination, including
dependent coverage, will also be
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continued for such period on the same terms, to the extent
permitted by the applicable policies or contracts. Any costs
Employee was paying for such coverages at the time of
termination shall be paid by Employee by separate check
payable to the Company each month in advance or by reduction
of amounts owed to Employee by the Employer. If the terms of
any benefit plan referred to in this Section, or the laws
applicable to such plan, do not permit continued
participation by Employee, then the Company will arrange for
other coverage at its expense providing substantially similar
benefits. The coverages provided for in this paragraph shall
be applied against and reduce the period for which COBRA will
be provided.
(iii) Stock Options. Notwithstanding any
provision in any option agreement, all outstanding stock
options granted to Employee by Employer or an affiliate of
Employer shall become fully vested on the date of Employee's
termination of employment and shall remain exercisable as
provided in the applicable option agreement or, if longer,
for a period of three (3) years following the date of
termination of employment. To the extent necessary, this
provision shall be deemed an amendment of any option
agreement between the Employee and the Employer or an
affiliate of the Employer.
(b) If Employee's employment hereunder is terminated by
Employee pursuant to Section 2(b)(iii) hereof other than for "Good
Reason" as defined below, then, in addition to any other amount
payable pursuant to Section 3.2(a), the Employee shall be entitled to
receive the compensation and benefits set forth in subsections (i)
through (iii) of Subsection 3.3(a) above.
3.4 Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
(a) "Change in Control" means any of the following
events:
(i) The acquisition (other than from the
Employer) by any person of beneficial ownership of fifty
percent (50%) or more of the combined voting power of the
Employer's then outstanding voting securities; provided,
however, that for purposes of this Section, person shall not
include any person who on the date hereof owns 25% or more of
the Employer's outstanding securities, and a Change in
Control shall not be deemed to occur solely because fifty
percent (50%) or more of the combined voting power of the
Employer's then outstanding securities is acquired by (1) a
trustee or other fiduciary holding securities under one or
more employee benefit plans maintained by the Employer or any
of its subsidiaries, or (2) any corporation, which,
immediately prior to such acquisition, is owned directly or
indirectly by the shareholders of the Employer in the same
proportion as their ownership of stock in the Employer
immediately prior to such acquisition.
(ii) Approval by shareholders of the Employer of
(1) a merger or consolidation involving the Employer if the
shareholders of the Employer,
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immediately before such merger or consolidation do not, as a
result of such merger or consolidation, own, directly or
indirectly, more than fifty percent (50%) of the combined
voting power of the then outstanding voting securities of the
corporation resulting from such merger or consolidation in
substantially the same proportion as their ownership of the
combined voting power of the voting securities of the
Employer outstanding immediately before such merger or
consolidation, or (2) a complete liquidation or dissolution
of the Employer, or (3) an agreement for the sale or other
disposition of all or substantially all of the assets of the
Employer.
(iii) A change in the composition of the Board
such that the individuals who, as of the date of this
Agreement, constitute the Board (such Board shall be
hereinafter referred to as the "Incumbent Board") cease for
any reason to constitute at least a majority of the Board;
provided, however, for purposes of this Section that any
individual who becomes a member of the Board subsequent to
the Effective Date whose election, or nomination for election
by the Employer's shareholders, was approved by a vote of at
least a majority of those individuals who are members of the
Board and who were also members of the Incumbent Board (or
deemed to be such pursuant to this proviso) shall be
considered as though such individual were a member of the
Incumbent Board; but, provided, further, that any such
individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act, including any successor
to such Rule), or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than
the Board, shall not be so considered as a member of the
Incumbent Board.
(iv) The occurrence of any other event or
circumstance which is not covered by (i) through (iii) above
which the Board determines affects control of the Company and
adopts a resolution that such event or circumstance
constitutes a Change in Control for the purposes of this
Agreement.
(b) A "Good Reason" for termination by Employee of
Employee's employment shall mean the occurrence (without the
Employee's express written consent), within the twelve (12) month
period following the date of a Change in Control, of any one of the
following acts by the Employer, or failures by the Employer to act,
unless, in the case of any act or failure to act described in
paragraph (i) or (iv) below, such act or failure to act is corrected
within 30 days after notice by the Employee to the Employer of the act
or failure to act:
(i) the assignment to Employee of any duties
inconsistent with Employee's title and status set forth
herein, or a substantial adverse alteration in the nature or
status of Employee's responsibilities at the Employer from
those in effect immediately prior to the Change in Control;
(ii) a substantial reduction by the Employer in
Employee's Base Salary;
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(iii) the relocation of Employee's principal
office to a place more than 50 miles from Atlanta, Georgia;
(iv) the failure by the Employer to continue in
effect any compensation or benefit plan or program in which
Employee participates immediately prior to the Change in
Control, which is material to Employee's total compensation,
unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to
such plan, or the failure by the Employer to continue the
Employee's participation in such plan (or in such substitute
or alternative plan) on a basis not materially less
favorable, both in terms of the amount of benefits provided
and the level of Employee's participation relative to other
participants, as existed at the time of the Change in
Control.
The Employee's right to terminate the Employee's employment for Good
Reason shall not be affected by the Employee's incapacity due to physical or
mental illness, except for a total disability as defined in Section 2 above.
The Employee's continued employment shall not constitute consent to, or a
waiver of rights with respect to, any act or failure to act constituting Good
Reason hereunder.
Section 4. Partial Restraint on Post-termination Competition.
4.1 Definitions. For the purposes of this Section 4, the
following definitions shall apply:
(a) "Company Activities" means the business of selling
caller ID technology and hardware, fulfillment services, e-commerce
fulfillment and e-commerce return services as well as other similar
services that Innotrac or its subsidiaries is involved in at the date
of this agreement.
(b) "Competitor" means any business, individual,
partnership, joint venture, association, firm, corporation or other
entity, other than the Employer or its affiliates or subsidiaries,
engaged, wholly or partly, in Company Activities.
(c) "Competitive Position" means (i) the direct or
indirect ownership or control of all or any portion of a Competitor;
or (ii) any employment or independent contractor arrangement with any
Competitor whereby Employee will serve such Competitor in any
managerial capacity.
(d) "Confidential Information" means any confidential,
proprietary business information or data belonging to or pertaining to
Employer that does not constitute a "Trade Secret" (as hereinafter
defined) and that is not generally known by or available through legal
means to the public, including, but not limited to, information
regarding Employer's customers or actively sought prospective
customers, suppliers, manufacturers and distributors gained by
Employee as a result of his employment with Employer.
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(e) "Customer" means actual customers or actively sought
prospective customers of Employer during the Term.
(f) "Noncompete Period" or "Nonsolicitation Period"
means the period beginning the date hereof and ending on the first
anniversary of the termination of Employee's employment with Employer.
(g) "Territory" means the area within a thirty-five (35)
mile radius of any corporate office of Employer or any of its
subsidiaries, affiliates or divisions.
(h) "Trade Secrets" means information or data of or
about Employer, including but not limited to technical or
non-technical data, formulas, patterns, compilations, programs,
devices, methods, techniques, drawings, processes, financial data,
financial plans, products plans, or lists of actual or potential
customers, clients, distributees or licensees, information concerning
Employer's finances, services, staff, contemplated acquisitions,
marketing investigations and surveys, that (i) derive economic value,
actual or potential, from not being generally known to, and not being
readily ascertainable by proper means by, other persons who can obtain
economic value from their disclosure or use; and (ii) are the subject
of efforts that are reasonable under the circumstances to maintain
their secrecy.
(i) "Work Product" means any and all work product,
property, data documentation or information of any kind, prepared,
conceived, discovered, developed or created by Employee for Employer
or its affiliates, or any of Employer's or its affiliates' clients or
customers.
4.2 Trade Name and Confidential Information.
(a) Employee hereby agrees that (i) with regard to each
item constituting all or any portion of the Trade Secrets, at all
times during the Term and all times during which such item continues
to constitute a Trade Secret under applicable law; and (ii) with
regard to any Confidential Information, during the Term and the
Noncompete Period:
(i) Employee shall not, directly or by
assisting others, own, manage, operate, join, control or
participate in the ownership, management, operation or
control of, or be connected in any manner with, any business
conducted under any corporate or trade name of Employer or
name similar thereto, without the prior written consent of
Employer;
(ii) Employee shall hold in confidence all Trade
Secrets and all Confidential Information and will not, either
directly or indirectly, use, sell, lend, lease, distribute,
license, give, transfer, assign, show, disclose, disseminate,
reproduce, copy, appropriate or otherwise communicate any
Trade Secrets or Confidential Information, without the prior
written consent of Employer; and
(iii) Employee shall immediately notify Employer
of any unauthorized disclosure or use of any Trade Secrets or
Confidential Information of which
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Employee becomes aware. Employee shall assist Employer, to
the extent necessary, in the procurement or any protection of
Employer's rights to or in any of the Trade Secrets or
Confidential Information.
4.3 Noncompetition.
(a) The parties hereto acknowledge that Employee is
conducting Company Activities throughout the Territory. Employee
acknowledges that to protect adequately the interest of Employer in
the business of Employer it is essential that any noncompete covenant
with respect thereto cover all Company Activities and the entire
Territory.
(b) Employee hereby agrees that, during the Term and the
Noncompete Period, Employee will not, in the Territory, either
directly or indirectly, alone or in conjunction with any other party,
accept, enter into or take any action in conjunction with or in
furtherance of a Competitive Position. Employee shall notify Employer
promptly in writing if Employee receives an offer of a Competitive
Position during the Noncompete Term, and such notice shall describe
all material terms of such offer.
Nothing contained in this Section 4 shall prohibit Employee from
acquiring not more than five percent (5%) of any company whose common stock is
publicly traded on a national securities exchange or in the over-the-counter
market.
4.4 Nonsolicitation During Employment Term. Employee hereby
agrees that Employee will not, during the Term, either directly or indirectly,
alone or in conjunction with any other party solicit, divert or appropriate or
attempt to solicit, divert or appropriate, any Customer for the purpose of
providing the Customer with services or products competitive with those offered
by Employer during the Term.
4.5 Nonsolicitation During Nonsolicitation Period. Employee
hereby agrees that Employee will not, during the Nonsolicitation Period, either
directly or indirectly, alone or in conjunction with any other party solicit,
divert or appropriate or attempt to solicit, divert or appropriate, any
Customer for the purpose of providing the Customer with services or products
competitive with those offered by Employer during the Term; provided, however,
that the covenant in this clause shall limit Employee's conduct only with
respect to those Customers with whom Employee had substantial contact (through
direct or supervisory interaction with the Customer or the Customer's account)
during a period of time up to but no greater than two (2) years prior to the
last day of the Term.
Section 5. Miscellaneous.
5.1 Severability. The covenants in this Agreement shall be
construed as covenants independent of one another and as obligations distinct
from any other contract between Employee and Employer. Any claim that Employee
may have against Employer shall not constitute a defense to enforcement by
Employer of this Agreement.
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5.2 Survival of Obligations. The covenants in Section 4 of this
Agreement shall survive termination of Employee's employment, regardless of who
causes the termination and under what circumstances.
5.3 Notices. Any notice or other document to be given hereunder
by any party hereto to any other party hereto shall be in writing and delivered
in person or by courier, by telecopy transmission or sent by any express mail
service, postage or fees prepaid at the following addresses:
EMPLOYER
Innotrac Corporation
0000 Xxxxxxxxx Xxxxxxx
Xxxxxx, XX 00000
Attention: Xx. Xxxxx Xxxxxxx
Chief Executive Officer
Telephone No.: (000) 000-0000
EMPLOYEE
Xx. Xxxxxx Xxxxx
--------------------------
--------------------------
or at such other address or number for a party as shall be specified by like
notice. Any notice which is delivered in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party or its agent.
5.4 Binding Effect. This Agreement inures to the benefit of, and
is binding upon, Employer and their respective successors and assigns, and
Employee, together with Employee's executor, administrator, personal
representative, heirs, and legatees.
5.5 Entire Agreement. This Agreement is intended by the parties
hereto to be the final expression of their agreement with respect to the
subject matter hereof and is the complete and exclusive statement of the terms
thereof, notwithstanding any representations, statements or agreements to the
contrary heretofore made. This Agreement may be modified only by a written
instrument signed by all of the parties hereto.
5.6 Governing Law. This Agreement shall be deemed to be made in,
and in all respects shall be interpreted, construed, and governed by and in
accordance with, the laws of the State of Georgia. No provision of this
Agreement shall be construed against or interpreted to the disadvantage of any
party hereto by any court or other governmental or judicial authority or by any
board of arbitrators by reason of such party or its counsel having or being
deemed to have structured or drafted such provision.
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5.7 Headings. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
5.8 Specific Performance. Each party hereto hereby agrees that
any remedy at law for any breach of the provisions contained in this Agreement
shall be inadequate and that the other parties hereto shall be entitled to
specific performance and any other appropriate injunctive relief in addition to
any other remedy such party might have under this Agreement or at law or in
equity.
5.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
INNOTRAC CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
Chief Executive Officer
EMPLOYEE
/s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
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