EMPLOYMENT AGREEMENT
Exhibit
10.1
EMPLOYMENT
AGREEMENT
(the
"Agreement") dated January 30, 2006 and effective as of the 1st
day of
December, 2005 between YTB
INTERNATIONAL, INC., a
Delaware corporation (the
"Corporation"), with principal executive offices located at 000 Xxxxxx Xxxxxx,
Xxxxxxxxx Xxxxxx, XX 00000; and Xxxx X. Xxxxx, residing at c/o the Corporation
at Xxx Xxxxxxx Xxxx Xxxx Xxxxx, Xxxxxxxxxxxx, XX 00000 (the
"Executive").
W
I T N E S E T H:
WHEREAS,
the
Corporation desires to employ Executive as Chief Financial Officer of the
Corporation to engage in such activities and to render such services under
the
terms and conditions hereof and has authorized and approved the execution of
this Agreement; and
WHEREAS,
Executive desires to be employed by the Corporation under the terms and
conditions hereinafter provided;
NOW,
THEREFORE,
in
consideration of the mutual covenants and undertakings herein contained, the
parties agree as follows:
1. Employment,
Duties and Acceptance.
1.1 Services.
The
Corporation hereby employs Executive, for the Term (as hereinafter defined
in
Section 2 hereof), to render services to the business and affairs of the
Corporation in the office referenced in the recitals hereof and, in connection
therewith, shall perform such duties as directed by the Board of Directors
of
the Corporation from time to time, in its reasonable discretion, and shall
perform such other duties as shall be consistent with the responsibilities
of
such office (collectively the "Services"). Executive shall perform activities
related to such office as he shall reasonably be directed or requested to so
perform by the Chief Executive Officer to whom he shall report. Executive shall
use his best efforts, skill and abilities to promote the interests of the
Corporation and its subsidiaries.
1.2 Acceptance.
Executive hereby accepts such employment and agrees to render the Services.
Executive shall not engage in any other business activity or serve in any
industry, trade, professional, governmental or academic position during the
term
of this Agreement, except as may be expressly approved in advance by the Board
in writing.
1.3 Representations
of the Executive.
The
Executive represents and warrants to the Corporation that his execution and
delivery of this Agreement, his performance of the Services hereunder and the
observance of his other obligations contemplated hereby will not (i) violate
any
provisions of or require the consent or approval of any party to any agreement,
letter of intent or other document to which he is a party or (ii) violate or
conflict with any arbitration award, judgment or decree or other restriction
of
any kind to or by which he is subject or bound.
2. Term
of Employment.
The
term
of Executive's employment under this Agreement (the "Term") shall commence
on
December 1, 2005 (the "Commencement Date") and shall terminate on December
31,
2009 unless sooner terminated pursuant to Sections 8 or 4.1 of this Agreement;
provided,
however,
if the
Corporation shall fail to give Executive notice of non-renewal not less than
120
days prior to the scheduled expiration of the Term hereof, the Term shall
automatically be extended for an additional three (3) year period.
Notwithstanding anything to the contrary contained herein, the provisions of
this Agreement governing Protection of Confidential Information shall continue
in effect as specified in Section 9 hereof.
3. Base
Salary and Expense Reimbursement.
3.1 Base
Salary.
During
the Term, as full compensation for the Services, the Corporation agrees to
pay
Executive a minimum base salary ("Base Salary") at the annual rate of $150,000
for the period from December 1, 2005 to December 31, 2006, increasing annually
thereafter in an amount equal to $30,000 ("Salary Increments"). In the event
the
Corporation is unable to pay a Salary Increment, the Board of Directors of
the
Corporation may elect to defer such payment. In the event of deferment, the
Salary Increment shall continue to be accrued until such time as the Corporation
is financially able to make such payments. Base Salary is subject to withholding
and other applicable taxes, payable during the term of this Agreement in
accordance with the Corporation's customary payment practices, but not less
frequently than monthly.
3.2 Business
Expense Reimbursement.
Upon
submission to, and approval by an officer of the Corporation designated by
the
Board of Directors of the Corporation, of a statement of expenses, reports,
vouchers or other supporting information, which approval shall be granted or
withheld based on the Corporation's policies in effect at such time, the
Corporation shall promptly reimburse Executive for all reasonable business
expenses actually incurred or paid by him during the Term or renewals thereof
in
the performance of the Services, including, but not limited to, expenses for
entertainment, travel and similar items.
4. Severance.
4.1 Termination
Without Cause.
In the
event that Executive's employment hereunder shall be terminated by the
Corporation without Cause (as defined in Section 8.3 hereof) at any time prior
to the end of the Term, the Executive shall be entitled to receive from the
Corporation, in addition to any Base Salary and bonus earned to the date of
termination, a severance payment in an amount equal to the Executive's Base
Salary for the preceding two fiscal year of the Corporation and shall be paid
in
biweekly increments during the two (2) years following such termination. In
the
event of such termination, the amounts due hereunder shall be payable without
offset or defense or any obligation of the Executive to mitigate damages.
5. Additional
Benefits.
5.1 In
General.
In
addition to the compensation, bonuses, expenses and other benefits to be paid
under Sections 3, 4 and 5 hereof, Executive will be entitled to all rights
and
benefits for which he shall be eligible under any insurance, health and medical,
incentive, bonus, profit-sharing, pension
or other extra compensation or "fringe" benefit plan of the Corporation or
any
of its subsidiaries now existing or hereafter adopted for the benefit of the
executives or employees generally of the Corporation. The provisions of this
Agreement which incorporate employee benefit packages shall change as and when
such employee benefit packages change.
-2-
5.2 Benefits
Upon Death or Disability.
In the
event the Executive’s employment terminates due to the death of the Executive or
the Executive becomes disabled (as defined in Section 8.2), the Executive’s
estate shall receive a one time grant of the Company’s common stock, $.001 par
value per share (“Common Stock”), within fifteen (15) days of the termination of
the Executive’s employment, for such number of shares as calculated as
follows:
z
=
y/x;
z
=
number of shares of Common Stock to be received by the Executive’s
estate.
y
= then
current Base Salary.
|
x
=
the closing trading price of the Common Stock on the date of termination
of Executive’s employment due to death or disability of the Executive as
reported on the OTCBB or similar public market or in the event there
is no
public market for the Common Stock, it shall be the fair market value
of
the Common Stock as determined by an independent valuation expert
who has
experience in valuing companies in the same industry as the
Corporation.
|
The
equity compensation plan contemplated by this provision is subject to
stockholder approval.
6. Vacation.
The
Executive shall be entitled each year during the Term of this Agreement to
a
vacation period of such number of weeks as shall be determined by the Board
of
Directors prior to the January 1, 2005, during which all salary, compensation,
benefits and other rights to which the Executive is entitled to hereunder shall
be provided in full. Such vacation may be taken in the Executive's discretion,
and such time or times as are not inconsistent with the reasonable business
needs of the Corporation.
7. Insurability;
Right to Insure.
Executive represents and warrants to the Corporation that on the date hereof
he
is, and upon the commencement of the Term he will be, insurable at standard
premium rates. Executive agrees that the Corporation shall have the right during
the Term to insure the life of Executive by a policy or policies of insurance
in
such amount or amounts as it may deem necessary or desirable, and the
Corporation shall be the beneficiary of any such policy or policies and shall
pay the premiums or other costs thereof. The Corporation shall have the right,
from time to time, to modify any such policy or policies of insurance or to
take
out new insurance on the life of Executive. Executive agrees, upon request,
at
any time or times prior to the commencement of or during the Term to sign and
deliver any and all documents and to submit to any physical or other reasonable
examinations which may be required in connection with any such policy or
policies of insurance or modifications thereof.
-3-
8. Termination.
8.1 Death.
If
Executive dies during the Term of this Agreement, Executive's employment
hereunder shall terminate upon his death and all obligations of the Corporation
hereunder shall terminate on such date, except that Executive's estate or his
designated beneficiary shall be entitled to: (i) the issuance of the securities
set forth in Section 5.2 and (ii) payment of any unpaid accrued Base Salary
through the date of his death. In addition, any accrued and unpaid Bonus shall
be paid in accordance with Section 4 hereof.
8.2 Disability.
Subject
to the provisions of Section 5.1, if Executive shall be unable to perform a
significant part of his duties and responsibilities in connection with the
conduct of the business and affairs of the Corporation and such inability lasts
for (i) a period of at least one hundred twenty (120) consecutive days, or
(ii)
periods aggregating at least one hundred eighty (180) days during any three
hundred sixty five (365) consecutive days, by reason of Executive's physical
or
mental disability, whether by reason of injury, illness or similar cause,
Executive shall be deemed disabled, and the Corporation any time thereafter
may
terminate Executive's employment hereunder by reason of the disability. Upon
delivery to Executive of such notice, all obligations of the Corporation
hereunder shall terminate, except that Executive shall be entitled to: (a)
the
issuance of the securities set forth in Section 6.2 and (b) the payment of
any
unpaid accrued Base Salary through the date of termination. In addition, any
accrued and unpaid Bonus shall be paid in accordance with Section 4 hereof.
The
obligations of Executive under Section 9 hereof shall continue notwithstanding
termination of Executive's employment pursuant to this Section
8.2.
8.3 Termination
for Cause.
The
Corporation may at any time during the Term, without any prior notice, terminate
this Agreement and discharge Executive for Cause, whereupon the Corporation's
obligation to pay compensation or other amounts payable hereunder to or for
the
benefit of Executive shall terminate on the date of such discharge. As used
herein the term "Cause" shall mean: (i) a willful and material breach by
Executive of the terms of this Agreement, (ii) willful violation of specific
and
lawful written direction from the Board of Directors of the Corporation;
provided such direction is not inconsistent with the Executive's duties and
responsibilities the Executive is holding at the time of the directive; (iii)
fraud, embezzlement or other material dishonesty by the Executive with respect
to the Corporation or any of its Affiliates; (iv) conviction of the Executive
of
a felony by a federal or state court of competent jurisdiction; (v) Executive's
willful failure to perform (other than by reason of disability), or gross
negligence in the performance of the Services; or (vi) ;Executive’s excessive
absenteeism, alcoholism or drug abuse. The obligations of the Executive under
Section 9 shall continue notwithstanding termination of the Executive's
employment pursuant to this Section 8.3.
8.4 Termination
Without Cause.
The
Corporation shall have the option to terminate this Agreement without Cause
upon
ninety (90) days written notice to the Executive. In the event the Corporation
terminates this Agreement without Cause as defined above, the Corporation shall
pay the Executive upon termination, the amount required pursuant to Section
4.1.
The obligations of the Executive under Section 9 hereof shall continue
notwithstanding termination of the Executive's employment pursuant to this
Section 8.4.
-4-
8.5 Post
Agreement Employment.
In the
event Executive remains in the employ of the Corporation following termination
of this Agreement, by the expiration of the Term or otherwise, then such
employment shall be at will.
9. Protection
of Confidential Information; Intellectual Property.
In
view
of the fact that Executive's work for the Corporation will bring him into close
contact with confidential information and plans for future developments,
Executive agrees to the following:
9.1 Secrecy.
To keep
secret and retain in the strictest confidence all confidential matters of the
Corporation, including, without limitation, trade "know how" and trade secrets,
customer lists, pricing policies, marketing plans, technical processes,
formulae, inventions and research projects, and other business affairs of the
Corporation, learned by him heretofore or hereafter, and not to disclose them
to
anyone inside or outside of the Corporation, except in the course of performing
the Services hereunder or with the express written consent of the Chief
Executive Officer or Board of Directors of the Corporation and except to the
extent such information is already known to the general public.
9.2 Return
Memoranda, etc.
To
deliver promptly to the Corporation on termination of his employment, or at
any
other time as the Chief Executive Officer or the Board of Directors of the
Corporation may so request, all memoranda, notes, records, reports, manuals,
drawings, blueprints and other documents (and all copies thereof) relating
to
the Corporation's business and all property associated therewith, which he
may
then possess or have under his control.
9.3 Covenants.
9.3.1 Non-competition.
Executive agrees that at all times while he is employed by the Corporation
and,
regardless of the reason for termination of his employment or this Agreement,
for a period of two (2) years thereafter, he will not, as a principal, agent,
employee, employer, consultant, stockholder, investor, director or co-partner
of
any person, firm, corporation or business entity other than the Corporation,
or
in any individual or representative capacity whatsoever, directly or indirectly,
without the express prior written consent of the Corporation:
(i) engage
or
participate in any business whose products or services are competitive with
that
of the Corporation, which business is the sale of travel and sale support
services to the travel industry, and which conducts or solicits business, or
transacts with supplier or customers located within the United States or Puerto
Rico;
(ii) aid
or
counsel any other person, firm, corporation or business entity to do any of
the
above;
-5-
(iii) become
employed by a firm, corporation, partnership or joint venture which competes
with the business of the Corporation within the United States or Puerto Rico;
or
(iv) approach,
solicit business from, or otherwise do business or deal with any customer of
the
Corporation in connection with any product or service competitive to any
provided by the Corporation.
9.3.2 Anti-Raiding.
Executive agrees that during the term of his employment hereunder, and,
thereafter for a period of two (2) years, he will not, as a principal, agent,
employee, employer, consultant, director or partner of any person, firm,
corporation or business entity other than the Corporation, or in any individual
or representative capacity whatsoever, directly or indirectly, without the
prior
express written consent of the Corporation approach, counsel or attempt to
induce any person who is then in the employ of the Corporation to leave the
employ of the Corporation or employ or attempt to employ any such person or
persons who at any time during the preceding six months was in the employ of
the
Corporation.
9.3.3 Executive's
Acknowledgements.
Executive acknowledges (i) that his position with the Corporation requires
the
performance of services which are special, unique, and extraordinary in
character and places him in a position of confidence and trust with the
customers and employees of the Corporation, through which, among other things,
he shall obtain knowledge of the Corporation's "technical information" and
"know-how" and become acquainted with its customers, in which matters the
Corporation has substantial proprietary interests; (ii) that the restrictive
covenants set forth above are necessary in order to protect and maintain such
proprietary interests and the other legitimate business interests of the
Corporation; and (iii) that the Corporation would not have entered into this
Agreement unless such covenants were included herein. Executive also
acknowledges that the business of the Corporation presently will extend
throughout the United States and Puerto Rico, and that he will personally
supervise and engage in such business on behalf of Corporation and, accordingly,
it is reasonable that the restrictive covenants set forth above are not more
limited as to geographic area then is set forth therein. Executive also
represents to the Corporation that the enforcement of such covenants will not
prevent Executive from earning a livelihood or impose an undue hardship on
the
Executive.
9.3.4 Assignment
of Rights to Intellectual Property.
Executive shall promptly and fully disclose all Intellectual Property to the
Corporation. Executive hereby assigns and agrees to assign to the Corporation
(or as otherwise directed by the Corporation) Executive's full right, title
and
interest in and to all Intellectual Property. Executive agrees to execute any
and all applications for domestic and foreign patents, copyrights or other
proprietary rights and to do such other acts (including without limitation
the
execution and delivery of instruments of further assurance or confirmation)
requested by the Corporation to assign the Intellectual Property to the
Corporation and to permit the Corporation to enforce any patents, copyrights
or
other proprietary rights to the Intellectual Property. Executive will not charge
the Corporation for time spent, although the Corporation will reimburse
Executive for any expenses Executive reasonably incurs, in complying with these
obligations. All copyrightable works that Executive creates shall be considered
"work made for hire". "Intellectual Property" means inventions, discoveries,
developments, methods, processes, compositions, works, concepts and ideas
(whether or not patentable or copyrightable or constituting trade secrets)
conceived, made, created, developed or reduced to practice by Executive (whether
alone or with others, whether or not during normal business hours or on or
off
Corporation premises) during Executive's employment that relate to either the
Products or any prospective activity of the Corporation under active
consideration. “Products” means all products planned, researched, developed,
tested, manufactured, sold, licensed, leased or otherwise distributed or put
into use by the Corporation or any of its Affiliates, together with all services
provided or planned by the Corporation, during Executive's
employment.
-6-
9.4 Severability.
If any
of the provisions of this Section 9, or any part thereof, is hereinafter
construed to be invalid or unenforceable, the same shall not affect the
remainder of such provision or provisions, which shall be given full effect,
without regard to the invalid portions. If any of the provisions of this Section
9, or any part thereof, is held to be unenforceable because of the duration
of
such provision, the area covered thereby or the type of conduct restricted
therein, the parties agree that the court making such determination shall have
the power to modify the duration, geographic area and/or other terms of such
provision and, as so modified, said provision(s) shall then be enforceable.
In
the event that the courts of any one or more jurisdictions shall hold such
provisions wholly or partially unenforceable by reason of the scope thereof
or
otherwise, it is the intention of the parties hereto that such determination
not
bar or in any way affect the Corporation's right to the relief provided for
herein in the courts of any other jurisdictions as to breaches or threatened
breaches of such provisions in such other jurisdictions, the above provisions
as
they relate to each jurisdiction being, for this purpose, severable into diverse
and independent covenants.
9.5 Injunctive
Relief.
Executive acknowledges and agrees that, because of the unique and extraordinary
nature of his services, any breach or threatened breach of the provisions of
Sections 9.1, 9.2, or 9.3 hereof will cause irreparable injury and incalculable
harm to the Corporation, and the Corporation shall, accordingly, be entitled
to
injunctive and other equitable relief for such breach or threatened breach
and
that resort by the Corporation to such injunctive or other equitable relief
shall not be deemed to waive or to limit in any respect any right or remedy
which the Corporation may have with respect to such breach or threatened breach.
The Corporation and Executive agree that any such action for injunctive or
equitable relief shall be heard in a state or federal court situate in New
Jersey and each of the parties hereto, hereby agrees to accept service of
process by registered mail and to otherwise consent to the jurisdiction of
such
courts.
9.6 Expenses
of Enforcement of Covenants.
In the
event that any action, suit or proceeding at law or in equity is brought to
enforce the covenants contained in Sections 9.1, 9.2, or 9.3 hereof or to obtain
money damages for the breach thereof, the party prevailing in any such action,
suit or other proceeding shall be entitled upon demand, to reimbursement from
the other party for all expenses (including, without limitation, reasonable
attorneys' fees and disbursements) incurred in connection
therewith.
9.7 Separate
Agreement.
The
provisions of this Section 9 shall be construed as an agreement on the part
of
the Executive independent of any other part of this Agreement or any other
agreement, and the existence of any claim or cause of action of the Executive
against the Corporation, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Corporation of the
provisions of this Section 9.
-7-
10. Indemnification.
The
Corporation shall provide the Executive (including his heirs, executors and
administrators) with coverage under a standard directors and officer’s liability
insurance policy at the Corporation's expense to the same extent as provided
for
any other director, officer or trustee of the Corporation. In addition, the
Corporation shall indemnify the Executive (and his heirs, executors and
administrators) to the fullest extent permitted under the law of its state
of
incorporation against all expenses and liabilities reasonably incurred by him
in
connection with or arising out of any action, suit or proceeding in which the
Executive may be involved by reason of his having been a director or officer
of
the Corporation or any subsidiary thereof. Such expenses and liabilities shall
include, but not be limited to, judgments, court costs and attorneys' fees
and
the cost of reasonable settlements, such settlements to be approved by the
Board
if such action is brought against the Executive in his capacity as a director
or
officer of the Corporation or any subsidiary thereof. The Corporation shall,
upon the request of the Executive, advance to the Executive such amounts as
necessary to cover expenses, including without limitation legal fees and
expenses, incurred by the Executive in connection with any suit or proceeding
in
which the Executive may be involved by reason of his being or having been a
director or officer of the Corporation or of any subsidiary thereof. Such
indemnity and advance of expenses, however, shall not extend to matters as
to
which the Executive is finally adjudged to be liable for willful misconduct
in
the performance of his duties.
11. Arbitration.
Except
with respect to any proceeding brought under Section 9 hereof, any controversy,
claim, or dispute between the parties, directly or indirectly, concerning this
Employment Agreement or the breach hereof, or the subject matter hereof,
including questions concerning the scope and applicability of this arbitration
clause, shall be finally settled by arbitration in Essex County, New Jersey
pursuant to the rules then applying of the American Arbitration Association.
The
arbitrators shall consist of one representative selected by the Corporation,
one
representative selected by the Executive and one representative selected by
the
first two arbitrators. The parties agree to expedite the arbitration proceeding
in every way, so that the arbitration proceeding shall be commenced within
thirty (30) days after request therefore is made, and shall continue thereafter,
without interruption, and that the decision of the arbitrators shall be handed
down within thirty (30) days after the hearings in the arbitration proceedings
are closed. The arbitrators shall have the right and authority to assess the
cost of the arbitration proceedings and to determine how their decision or
determination as to each issue or matter in dispute may be implemented or
enforced. The decision in writing of any two of the arbitrators shall be binding
and conclusive on all of the parties to this Agreement. Should either the
Corporation or the Executive fail to appoint an arbitrator as required by this
Section 11 within thirty (30) days after receiving written notice from the
other
party to do so, the arbitrator appointed by the other party shall act for all
of
the parties and his decision in writing shall be binding and conclusive on
all
of the parties to this Employment Agreement. Any decision or award of the
arbitrators shall be final and conclusive on the parties to this Agreement;
judgment upon such decision or award may be entered in any competent Federal
or
state court located in the United States of America; and the application may
be
made to such court for confirmation of such decision or award for any order
of
enforcement and for any other legal remedies that may be necessary to effectuate
such decision or award.
-8-
12. Notices.
All
notices, requests, consents and other communications required or permitted
to be
given hereunder, shall be in writing and shall be deemed to have been duly
given
if delivered personally or sent by prepaid telegram, telecopy or mailed first
class, postage prepaid, by registered or certified mail (notices sent by
telegram or mailed shall be deemed to have been given on the date sent), to
the
parties at their respective addresses hereinabove set forth or to such other
address as either party shall designate by notice in writing to the other in
accordance herewith.
13. General.
13.1 Governing
Law.
This
Agreement shall be governed by and construed and enforced in accordance with
the
local laws of the State of New Jersey.
13.2 Captions.
The
section headings contained herein are for reference purposes only and shall
not
in any way affect the meaning or interpretation of this Agreement.
13.3 Entire
Agreement.
This
Agreement sets forth the entire agreement and understanding of the parties
relating to the subject matter hereof, and supersedes all prior agreements,
arrangements and understandings, written or oral, relating to the subject matter
hereof. No representation, promise or inducement has been made by either party
that is not embodied in this Agreement, and neither party shall be bound by
or
liable for any alleged representation, promise or inducement not so set
forth.
13.4 Severability.
If any
of the provisions of this Agreement shall be unlawful, void, or for any reason,
unenforceable, such provision shall be deemed severable from, and shall in
no
way affect the validity or enforceability of, the remaining portions of this
Agreement.
13.5 Waiver.
The
waiver by any party hereto of a breach of any provision of this Agreement by
any
other party shall not operate or be construed as a waiver of any subsequent
breach of the same provision or any other provision hereof.
13.6 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
be
deemed an original, but all of which taken together shall constitute one and
the
same Agreement.
13.7 Assignability.
This
Agreement, and Executive's rights and obligations hereunder, may not be assigned
by Executive. The Corporation may assign its rights, together with its
obligations, hereunder in connection with any sale, transfer or other
disposition of all or substantially all of its business or assets; in any event
the rights and obligations of the Corporation hereunder shall be binding on
its
successors or assigns, whether by merger, consolidation or acquisition of all
or
substantially all of its business or assets. This Agreement shall inure to
the
benefit of, and be binding upon, the Executive and his executors,
administrators, heirs and legal representatives.
-9-
13.8 Amendment.
This
Agreement may be amended, modified, superseded, cancelled, renewed or extended
and the terms or covenants hereof may be waived, only by a written instrument
executed by both of the parties hereto, or in the case of a waiver, by the
party
waiving compliance. No superseding instrument, amendment, modification,
cancellation, renewal or extension hereof shall require the consent or approval
of any person other than the parties hereto. The failure of either party at
any
time or times to require performance of any provision hereof shall in no matter
affect the right at a later time to enforce the same. No waiver by either party
of the breach of any term or covenant contained in this Agreement, whether
by
conduct or otherwise, in any one or more instances, shall be deemed to be,
or
construed as, a further or continuing waiver of any such breach, or a waiver
of
the breach of any other term or covenant contained in this
Agreement.
IN
WITNESS WHEREOF,
the
parties have executed this Agreement as of the date first above
written.
|
ATTEST:
|
|
|
By: ________________________
|
By: ______________________________
|
|
Name:
|
|
|
Title:
|
|
|
WITNESS:
|
|
|
______________________________
|
______________________________
|
|
Xxxx
X. Xxxxx, individually
|
-10-
