EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of April 1, 1997, between
Xxxxxxxxx Industries, Inc., a Delaware corporation, having its principal place
of business at Sawgrass International Corporate Park, 00000 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxx 00000 (the "Company"), and Xxxxxxx X. Xxxxxxx, an
individual residing at 0000 Xxxxxxxx Xxxxxxx Xxxx, Xxxxx, Xxxxxxx 00000 (the
"Employee").
W I T N E S S E T H:
WHEREAS, the Company desires to provide for the employment of the
Employee, and the Employee desires to accept such employment, on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the Company and the Employee hereby agree as follows:
1. Definitions.
(a) The "Agreement" shall mean this Employment Agreement between the
Company and the Employee.
(b) The "Board" shall mean the Board of Directors of the Company.
(c) The "Company" shall mean Xxxxxxxxx Industries, Inc., a Delaware
corporation.
(d) "Dependents" shall mean the Employee's spouse and children, if any.
(e) A "Change of Control" shall mean (i) any transaction that has the
result that stockholders of the Company immediately before such transaction
cease to own at least 51% of (x) the voting stock of the Company or (y) of any
entity that results from the participation of the Company in a reorganization,
liquidation or any other form of corporate transaction; (ii) a merger,
consolidation, reorganization, liquidation or dissolution in which the Company
does not survive; or (iii) a sale, lease, exchange or other disposition of all
or substantially all the property and assets of the Company.
(f) The "Effective Date" shall mean April 14, 1997.
(g) The "Employment Period" shall mean the period commencing on the
Effective Date and ending on the fifth anniversary of the Effective Date.
(h) The "Employee" shall mean Xxxxxxx X. Xxxxxxx.
(i) "GAAP" shall mean generally accepted accounting principles in the
United States as in effect from time to time.
(j) The "Health Insurance" shall mean health insurance benefits
comparable to the other contract employees of the Company.
(k) The "Salary" shall mean the amount set forth in Section 3(b)(i) of
the Agreement.
2. EMPLOYMENT PERIOD. The Company hereby agrees to employ the Employee,
and the Employee hereby agrees to be employed by the Company, for the duration
of the Employment Period and pursuant to the other terms and conditions provided
herein. This Agreement shall terminate at the end of the Employment Period,
unless terminated prior to the end of the Employment Period by virtue of one of
the provisions of Section 5 of this Agreement.
3. TERMS OF EMPLOYMENT.
(a) Position and Duties. During the Employment Period the Employee's
position shall be the Director of Finance. Upon mutually satisfactory
performance of the duties of Director of Finance, during the first 12 months of
employment, Xx. Xxxxxxx will be given the position of Chief Financial Officer.
(b) Compensation.
(i) Base Salary. As of the Effective Date, the Employee's annual
salary (the "Salary") shall be $100,000, payable twice monthly, for the duration
of the Employment Period. During the Employment Period, the Employee's Salary
may be reviewed and changed; however, the Company shall not pay the Employee a
Salary less than such amount during the Employment Period. Any increase in the
Salary shall not serve to limit or reduce any other obligation of the Company
under the Agreement.
(ii) Annual Company Bonus. For each calendar year commencing with
the year ending December 31, 1997, at the end of which the Employee is employed
by the Company:
(A) if the Company has Net Income (as hereinafter defined) for
such year of an amount equal to the Company's target net income before taxes as
determined solely by the Board (or the Executive Committee of the Board, if one
exists) for such year (the "Target"), the Employee shall be entitled to a bonus
in the amount equal to $20,000.
(B) if the Company has Net Income for such year more than the
Target and less than 150% of the Target, the Employee shall be entitled to a
bonus as calculated below:
B = $20,000 + $20,000 x (NI - T)
--------
T
where:
B = the bonus earned in such year.
T = the Target for such year.
NI = the actual Net Income of the Company for such year as
determined in accordance with GAAP.
(C) if the Company has Net Income for such year of 150% of the
Target or more, the Employee shall be entitled to a bonus of $30,000.
(D) if the Company has Net Income for such year of less than 50%
of the Target, the Employee shall not be entitled to a bonus.
(E) if the Company has Net Income for such year of at least 50%
of the Target
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but less than the Target, the Employee shall be entitled to a bonus as
calculated below:
B = $20,000 - ($20,000 x 2 x (T - NI))
----------------
T
where:
B = the bonus earned in such year.
T = the Target for such year.
NI = the actual Net Income of the Company for such year as
determined in accordance with GAAP.
(iii) Stock Options. As soon as practicable, the Company shall
issue to the Employee options to purchase 15,000 shares of the Company's common
stock, such options to be exercisable at a price equal to 100% of the fair
market value of the common stock of the Company at the time such options are
granted and shall vest with the Employee over three years.
(c) Benefits. In addition to the compensation payable to the Employee as
set forth in Section 3(b) above, during the Employment Period the Employee shall
be eligible for the following:
(i) Health Insurance. The Company shall provide Health Insurance
for the Employee and his Dependents. The provision of the Health Insurance shall
be subject to acceptance by the insurance company of the Employee and his
Dependents to the Company's current program or whatever other program the Board
may decide to elect. The Employee shall be solely responsible for all deductible
and copayment amounts due according to the Health Insurance. Upon termination of
this Agreement, all payments under this Section 3(c)(i) shall cease, provided,
however, that the Employee shall be entitled to payments for periods prior to
the date of the termination and for which the Employee has not yet been paid.
(ii) Pension Plan. the Company shall contribute an amount equal
to 5% of the Salary towards the accumulating life insurance plan/pension plan
selected and established by the Employee.
(iii) Other Benefits. The Employee shall be eligible for similar
incentive, stock option grants, savings, welfare (including without limitation
medical and dental insurance) plans, practices, policies and programs applicable
on or after the Effective Date to other contract employees of the Company as
determined in the discretion of the Board (or the Executive Committee, if any).
(d) Vacation. During the Employment Period, the Employee shall be
entitled to paid vacation in accordance with the policies and practices
applicable on or after the Effective Date to other executives of the Company,
provided that the Employee shall be entitled to a minimum of two (2) weeks of
paid vacation per calendar year. Vacation accrued but unused at the end of a
calendar year may be carried over into the following calendar year or years,
provided that unused vacation days shall be accrued up to a maximum of four
weeks.
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(e) Holidays and Sick Leave. The Employee shall be entitled to all
holidays that are prescribed by the Company's policies and practices. The
Employee shall be entitled to 6 days paid sick leave per year. Unused sick leave
days may not be carried over to the following calendar year or years.
4. Employee's Obligations and Representations; Indemnity.
(a) During the Employment Period, and excluding any periods of vacation
and sick leave to which the Employee is entitled, the Employee agrees to devote
substantially all of his attention and time during normal business hours to the
business and affairs of the Company and to perform faithfully and efficiently
the responsibilities assigned to the Employee by the Company.
(b) The Employee represents and warrants to the Company that there are
no agreements or arrangements, whether written or oral, in effect which would
prevent the Employee from rendering exclusive service to the Company during the
Employment Period, including without limitation any obligations or restrictions
of the Employee to his prior employer. The Employee further represents, warrants
and agrees with the Company that as of the Effective Date he has not made and
will not make during the Employment Period any commitment or do any act in
conflict with this Agreement, or take any action that might divert from the
Company any opportunity which would be in the scope of any present or future
business of the Company or any subsidiary thereof.
5. Termination.
(b) Death. This Agreement shall terminate automatically upon the
Employee's death. If the Employee's employment is terminated by reason of the
Employee's death, the Company shall have no further obligations to the
Employee's legal representatives under this Agreement, other than those
obligations accrued, earned or vested by the Employee as of the date of his
death. In addition, the Employee's family shall be entitled to receive benefits
at least equal to the most favorable benefits provided by the Company to
surviving families of other contract employees of the Company based on the terms
of the benefit plans referenced in Section 3(c) of this Agreement as in effect
on the date of the Employee's death.
(c) Disability. If the Company determines in good faith that the
Employee has a "disability" (as defined below), it may give the Employee written
notice of its intention to terminate the Employee's employment. In such event,
the Employee's employment with the Company shall terminate effective on the 30th
day after receipt by the Employee of such notice. No such notice of termination
by reason of disability shall be given until the Employee has experienced a
period of two consecutive months of disability and the disability is continuing.
The notice of termination shall not be effective if the Employee returns to
full-time performance of his duties prior to the expiration of the 30-day notice
period. For purposes of this Agreement, "disability" shall mean a physical or
mental condition which, two months after its commencement, is determined to be
total and permanent by a physician selected by the Company. The Employee shall
be entitled to all compensation and benefits provided for under this Agreement
during the two-month waiting period for the disability determination and during
the 30-day notice of termination period. In the event that the Company provides
long-term disability benefits for the Employee, such benefits shall not commence
until after the employment of the Employee has been terminated and the Company
has ceased paying the Employee compensation pursuant to the foregoing sentence.
If the Employee's employment is terminated by reason of the Employee's
disability, this Agreement shall terminate without further obligations
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to the Employee or the Employee's legal representatives under this Agreement,
other than those obligations accrued, earned or vested by the Employee as of the
date of the termination.
(d) Voluntary Termination. The Employee agrees to provide the Company
with 15 days notice prior to voluntarily terminating his employment (other than
for "good reason" as defined in Section 5(f) below). At the end of such 15-day
period, this Agreement shall terminate automatically and the Company shall have
no further obligations to the Employee under this Agreement, other than those
obligations accrued, earned or vested by the Employee as of the date of the
termination. The Employee shall not be entitled to any Bonus in respect of the
year of termination in the event the Employee's employment is terminated
pursuant to this Section 5(c).
(e) Cause. During the Employment Period, the Company may terminate the
Employee's employment for "cause" as defined below. For purposes of the
Agreement, "cause" shall mean:
(i) an act or acts of fraud, embezzlement or any other act that
would constitute a felony under the laws of the state of Florida or California
taken by the Employee;
(ii) repeated violations by the Employee of his obligations under
Section 4(a) of this Agreement which are not remedied within a reasonable period
of time after receipt of written notice from the Company of such violations or a
breach by the Employee of his representations or obligations under Section 4(b)
of this Agreement;
(iii) any direct or indirect disclosure of any confidential
information or other special knowledge of the finances, business or other
affairs of the Company; or
(iv) the indictment of the Employee of a crime, where the Company
reasonably believes it would impair the Employee's ability to perform his
services under this Agreement.
If the Employee's employment is terminated for cause, this Agreement shall
terminate without further obligations to the Employee under this Agreement,
other than those obligations accrued, earned or vested by the Employee as of the
date of the termination. The Employee shall not be entitled to any Bonus in
respect of the year of termination in the event the Employee's employment is
terminated for cause pursuant to this Section 5(d). Notwithstanding anything
herein to the contrary, the Company shall have the right, at any time upon
notice to the Employee, to terminate the Employment.
(f) Involuntary Termination. If during the Employment Period the Company
terminates the Employee's employment other than for cause or disability it shall
be deemed to be an involuntary termination and the Company shall pay to the
Employee the following amounts:
(i) to the extent not therefore paid, the Company shall pay the
Employee's Salary through the date of such involuntary termination and any
accrued bonus as determined by the Board;
(ii) the Company shall pay the Employee on the date of such
involuntary termination an amount equal to two months of the Employee's Base
Salary and an amount equal to six months of the Employee's Base Salary in the
event of termination following a Change of Control; and
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(iii) the Company shall pay in one cash lump sum any vacation
days accrued but unused as of the date of termination to be paid within 30 days
of such involuntary termination.
(g) Good Reason. During the Employment Period, the Employee may
terminate his employment for "good reason" as defined below. For purposes of
this Agreement, "good reason" shall mean:
(i) the assignment to the Employee of any duties inconsistent in
any respect with Employee's position, duties and responsibilities as set forth
in Section 3(a) of this Agreement or any action by the Company which results in
a diminution in such position, authority, duties or responsibilities, excluding
for this purpose any isolated, insubstantial and inadvertent action by the
Company which is not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Employee;
(ii) any failure by the Company to comply with any of the
provisions of Sections 3(b) through 3(e) of this Agreement regarding the
Employee's compensation, benefits, vacation, holidays and sick leave other than
an isolated, insubstantial and inadvertent action by the Company which is not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Employee.
In the event that the Employee terminates his employment for good reason as
defined in this Section 5(f), it shall be deemed to be an "involuntary
termination" as set forth in Section 5(e) above and the Employee shall be
entitled to all payments and obligations set forth in Sections 5 (e)(i) through
5(e)(iii) of this Agreement as if the Employee's employment had been
involuntarily terminated.
6. Notice of Termination. Any notice of termination by the Company for
any reason or by the Employee for any reason shall be communicated by a written
notice which indicates (i) the specific termination provision in this Agreement
relied upon, (ii) the facts and circumstances claimed to provide a basis for
such termination, and (iii) the date or proposed date of termination.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Employee's continuing or future participation in any benefit,
incentive or other plans, programs, policies or practices provided by the
Company and for which the Employee may otherwise qualify. Amounts which are
vested benefits or which the Employee is otherwise entitled to receive under any
plan, policy, practice or program of the Company at or subsequent to the
termination of the Employee's employment shall be payable in accordance with
such plan, policy, practice or program.
8. Full Settlement. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment or
other claim, right or action which the Company may have against the Employee.
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9. Confidentiality
(a) The Employee shall hold in a fiduciary capacity for the benefit of
the Company all secret, proprietary or confidential information, knowledge or
data relating to the Company and its business, including without limitation
financial information and customer lists, which shall have been obtained by the
Employee during his employment with the Company and which shall not be or become
public knowledge (other than by acts by the Employee or his representatives in
violation of this Agreement). Notwithstanding the foregoing, the Employee may
disclose any such information if such information is compelled by legal process,
provided that if Employee is so compelled, he shall provide the Company with
prompt notice so that it may seek a protective order or other remedy. In any
event, the Employee shall furnish only that portion of the confidential
information that is legally required to be disclosed.
(b) In the event that the Employee breaches any provision of this
Section 9 or Sections 10 or 11, the Company shall be entitled to apply to any
court of competent jurisdiction for an injunction restraining the Employee from
committing or continuing any violation of this Agreement. The Employee agrees
that there is no adequate remedy at law to remedy such a breach.
10. Non-Competition. The Employee agrees that (a) during the Employment
Period and (b) unless the Employee terminates his employment for "good reason"
or his employment is involuntarily terminated, other than for cause, for two
years thereafter (or, in the case of a Change of Control, for 6 months) he will
not, within the continental United States, Israel, Ireland, England or any other
country in which the Company has operations at the time of termination and prior
thereto, directly or indirectly, engage or participate or make any financial
investments in or become employed by or render advisory or other services to or
for any person, firm or corporation, or in connection with any business activity
which directly or indirectly is in competition with any of the business
operations or activities of the Company and its subsidiaries as of the date of
termination of his employment or for any time prior thereto. Nothing herein
contained, however, shall restrict the Employee from making any investments in
any company whose stock is listed on a national securities exchange or actively
traded in the over-the-counter market, as long as such investment does not give
him the right to control or influence the policy decisions of any such business
or enterprise which is or might be directly or indirectly in competition with
any of such business operations or activities of the Company or any of its
subsidiaries.
11. Restriction on Solicitation. The Employee agrees that during the
Employment Period and for two years thereafter, he will not:
(i) directly or indirectly solicit, raid, entice or induce any
employee of the Company or any of its subsidiaries to become an employee of any
person, firm or corporation which is, directly or indirectly, in competition
with the business or activities of the Company or any of its subsidiaries:
(ii) directly or indirectly approach any such employee for these
purposes;
(iii) authorize or knowingly approve the taking of such actions
by other persons on behalf of any such person, firm or corporation, or assist
any such person, firm or corporation in taking such action; or
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(iv) directly or indirectly solicit, raid, entice or induce any
person, firm or corporation who or which on the date hereof is, or at the time
during his employment with the Company shall be, a customer of the Company or of
any of its subsidiaries to become a customer for the same or similar products
which it purchased from the Company or any of its subsidiaries, of any other
person, firm or corporation, and the Employee shall not approach any such
customer for such purpose or authorize or knowingly approve the taking of such
actions by any other person.
12. Successors. This Agreement is personal to the Employee and without
the prior written consent of the Company shall not be assignable by the
Employee.
13. Binding Arbitration. In the event that the Company and the Employee
cannot agree on an interpretation of any provision of this Agreement, or in the
event that either of the parties fails to make any payments or otherwise fulfill
any obligations required by the terms of this Agreement, the Company and the
Employee agree to resolve any such dispute through arbitration under the rules
then obtaining of the American Arbitration Association in the State of Florida.
14. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Florida.
(b) The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This Agreement may not be amended or modified
otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
(c) All notices, requests, demands and other communications hereunder
shall be in writing and be deemed to have given if sent by facsimile
transmission, delivered by overnight or other carrier service, or mailed,
certified first class mail, postage prepaid, return receipt requested, to the
parties hereto at the following addresses:
If to the Company, to:
Xxxxxxxxx Industries, Inc.
00000 X.X. 0xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Att: President
Telecopier: (000) 000-0000
If to the Employee, to:
Xxxxxxx X. Xxxxxxx
0000 Xxxxxxxx Xxxxxxx Xxxx
Xxxxx, Xxxxxxx 00000
or to such other address as either party shall have furnished to the other in
accordance herewith.
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(d) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.
(e) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.
(f) A party's failure to insist upon strict compliance with any
provision hereof shall not be deemed to be a waiver of such provision or any
other provision thereof.
(g) This Agreement embodies the entire agreement between the Company and
the Employee and supersedes all prior agreements and understandings, oral or
written, with respect thereto.
(h) This Agreement may be executed in counterparts, each of which shall
be deemed an original and all of which, together, shall constitute one and the
same instrument.
[Remainder of page intentionally omitted; signatures to follow.]
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IN WITNESS WHEREOF, the Employee has hereunto set his hand and,
pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
XXXXXXXXX INDUSTRIES, INC.
By:______________________________
Name: Zivi X. Xxxxxx
Title: President & Chief Executive Officer
EMPLOYEE
---------------------------------
Xxxxxxx X. Xxxxxxx
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