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EMPLOYMENT AGREEMENT
THIS AGREEMENT made and entered into as of this 14th day of
April, 1998 by and between Accent Color Sciences, Inc., a
Connecticut corporation (the "Company"), and Xxxxxxx X. Xxxxxxxx,
an individual residing in Xxxxx Xxxxxxxxx, Xxxxxxx 00000 (the
"Employee").
WHEREAS, the Company desires to retain the services of the
Employee, and the Employee desires to be employed by the Company,
on the terms hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein provided, the parties hereto (the
"Parties") hereby agree as follows:
1. Term of Employment. The Company hereby employs the Employee,
and the Employee hereby accepts employment with the Company, all
in accordance with the terms and conditions hereof, for a term of
three (3) years commencing on April 15, 1998, (the "Commencement
Date") and ending April 14, 2001 (the "Employment Term").
2. Scope. During the Employment Term, the Employee shall be
employed by the Company in an executive capacity and shall serve
as President and Chief Executive Officer commencing May 8, 1998
and continuing for the balance of the Employment Term.
3. Compensation.
3.1 The Employee shall be paid a base salary at the rate of
$250,000 per annum ("Base Salary"), payable in equal bi-monthly
installments. Any increase in the Base Salary shall be solely at
the discretion of the Board of Directors (the "Board"). In no
event may the Base Salary be reduced. In addition, the Employee
shall be eligible to receive an annual bonus in an amount up to
60% of his Base Salary (the "Annual Bonus"). The amount of the
Annual Bonus shall be determined for each year, according to
criteria proposed for that year by the Employee to the Board, and
approved by the Board. The parties agree that such criteria will
be proposed by the Employee and acted upon by the Board, as soon
as practicable after the expiration of the first quarter of that
year.
3.2 On the Commencement Date, the Company shall grant to
the Employee Incentive Stock Options (the "ISO Options") to
purchase Ninety-Six Thousand (96,000) shares of the Company's
common stock, no par value, (the "Stock") and Non-Qualified Stock
Options (the "Non-Qualified Options") to purchase One Hundred and
Fifty-four Thousand (154,000) shares of the Stock, all under the
Company's 1995 Stock Incentive Plan (the "Plan") (the ISO Options
and the Non-Qualified Options are herein collectively referred to
as the "Options"). The exercise price of the Options shall be
the fair market value of the Stock on the date of grant. Such
Options shall vest ratably one-third annually on the first,
second and third anniversaries of the Commencement Date so that
upon the third anniversary of the Commencement Date the Employee
shall be fully vested in all such Options. The Options shall be
subject to approval by the shareholders of the Company of a
proposed increase in the number of authorized shares under the
Plan at the 1998 Annual Meeting of Shareholders.
3.3 On the Commencement Date, the Company shall grant to
the Employee a warrant to purchase One Hundred Thousand (100,000)
shares of Stock at the fair market value of the Stock on the date
of grant (determined in the same manner as under the Plan). Such
warrant shall be exercisable at any time from and after the date
of grant for a period of five (5) years from the date of grant.
3.4 The Employee shall be entitled to participate in any
employee benefit plan or program generally applicable to senior
executives of the Company, including without limitation pension,
life insurance, tax-qualified profit sharing, and medical
coverages as in effect from time to time.
3.5 The Employee shall be entitled to vacation in
accordance with the Company's vacation policy as currently in
effect from time to time, provided, however, in no event shall
such vacation be for a period less than five (5) weeks per annum.
The Employee may elect, at his option, to defer the use of
vacation from the year it is earned to subsequent years,
provided, however, the Company has the option to pay cash in lieu
of such deferred vacation, up to a maximum amount of two (2)
weeks of such deferred vacation, if (a) the amount of such
deferred vacation exceeds two weeks and (b) such payment is made
within thirty (30) days following the end of the year such
deferral is elected.
In the event of termination under Section 4 below, any and
all vacation owed to the Employee will be paid at the time of
termination.
3.6 During the term of this Agreement, the Company shall
reimburse the Employee, on a quarterly basis, for reasonable
living expenses in the Hartford, Connecticut area until the
Employee's establishment of a permanent residence in the
Hartford, Connecticut area. Such reimbursements shall be made
based on receipts provided to the Company by the Employee.
4. Termination.
4.1 General. Notwithstanding the provisions of Sections 1,
2 and 3 above, the Employee's employment may be terminated prior
to the end of the Employment Term as provided in Sections 4.2,
4.3, 4.4, 4.5 and 4.6 below.
4.2 Death or Disability. The Employee's employment shall
be terminated in the event of his death or Disability. Upon
termination of the Employee's employment hereunder as a result of
the Employee's death or Disability, the Employee (or, in the
event of his death, his Beneficiary) shall be entitled to (a) all
arrears of salary and expenses, (b) full and immediate vesting of
any then unvested options to purchase securities of the Company
which Employee may then hold, and (c) any other compensation or
benefits as determined under applicable plans and programs of the
Company (as in effect immediately prior to such termination).
For the purposes of this Agreement, "Disability" shall be
deemed to have occurred when the Employee shall be unable to
perform the duties of his then employment with the Company for an
aggregate period of more than 36 weeks in a consecutive period of
52 weeks, due to physical or mental impairment (other than as a
result of addiction to alcohol or any other drug) as determined
by a physician acceptable to both the Company and Employee.
The Employee may designate one or more persons to receive
payment of any compensation or other benefit payable on account
of the Employee's death, by giving written notice of such
designation to the Company in accordance with Section 13 below.
The person so designated shall be the Employee's Beneficiary with
respect to such payment. In the event the Employee has not
designated a Beneficiary with respect to any particular payment,
the Employee's estate shall be the Beneficiary with respect to
such payment.
4.3 Termination for Cause. The Employee's employment
hereunder may be terminated "for Cause" at any time upon written
notice from the Company to the Employee, which notice shall set
forth the specific facts on which such termination is based.
Upon any such termination for Cause, the Employee shall be
entitled to (i) all arrears of salary and expenses and (ii) any
other compensation or benefits as determined under applicable
plans and programs of the Company (as in effect immediately prior
to such termination). For the purposes of this Agreement "Cause"
shall mean:
(a) a dishonest act or omission by the Employee which
either (x) is intended to result in his substantial personal
enrichment at the expense of the Company, or (y) results in
his conviction of, or plea of nolo contendere to, a felony
or other serious crime (not including a motor vehicle
offense or a crime resulting from an action or omission
taken by the Employee in the course of his duties hereunder
and in the good faith belief that such action or omission
was in the best interest of the Company);
(b) gross misconduct or gross neglect of the
executive's duties and responsibilities hereunder, causing
material harm to the Company, unless remedied within 30 days
after receipt of written notice specifying the nature of
such misconduct or neglect from the Company; or
(c) a willful and material breach of this Agreement by
the Employee, unless such breach is corrected within 30 days
after receipt of written notice from the Company specifying
the nature of such breach.
Non-performance of duties due to Disability shall not
be grounds for termination for Cause.
4.4 Termination Without Cause. If the Company terminates
the Employee's employment other than for Disability, as provided
in Section 4.2, above, or for Cause, as provided in Section 4.3,
above, the Employee shall be entitled to:
(a) base salary for the longer of (i) a two-year
period commencing on the date Employee's employment
with the Company is terminated and (ii) the balance of
the Employment Term (such period hereinafter referred
to as the "Termination Period");
(b) Immediate vesting in all outstanding options
previously granted to the Employee;
(c) payment of health benefits for the Termination
Period; and(d) any vacation owed Employee under
subsection 3.5 above.
4.5 Constructive Termination Without Cause. In the event:
(a) there is a reduction, without the Employee's
consent, (i) in Employee's cash compensation or (ii) in the
aggregate benefits provided under this Agreement, or
(b) the Employee is removed from his position as Chief
Executive Officer of the Company, other than as a result of
a Disability as provided in Section 4.2 above or as a result
of a termination for Cause, as provided in Section 4.3
above, or
(c) there is a Change of Control of the Company.
the Employee shall be entitled to terminate his employment
voluntarily, and such termination shall be treated as a
termination by the Company without Cause under Section 4.4 above;
provided, however, that as a condition of such entitlement, the
Employee must serve the Company with written notice of his
voluntary termination of employment within twelve (12) months
after the occurrence of any of such events described in
subparagraphs (a), (b) or (c) of this Section 4.5, which event
shall be specified in such notice.
For purposes of this Section 4.5, a "Change of Control"
shall mean (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 30% or more of
either (a) the then outstanding shares of common stock of the
Company (the "Outstanding Common Stock") or (b) the combined
voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors
(the "Outstanding Voting Securities"); provided, however, that
for purposes of this subsection (i), the following acquisitions
shall not constitute a Change of Control: 1) any acquisition
directly from the Company, 2) any acquisition by the Company, or
3) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company; or (ii) An event that shall cause the
individuals who, as of the date hereof, constitute the Board of
Directors (the "Incumbent Board") to cease, for any reason, to
constitute at least a majority of the Board of Directors;
provided, however, that any individual becoming a director
subsequent to the date hereof, whose election or nomination for
election by the Company's shareholders 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 of Directors; or (iii)
Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
4.6 Voluntary Termination. The Employee may voluntarily
terminate his employment hereunder provided that, in the event of
such a termination, other than pursuant to a constructive
termination without cause, as provided in Section 4.5 above, the
Employee shall receive no further compensation, except as may be
provided in applicable plans and programs.
5. Covenant Not to Disclose. The Employee covenants and agrees
that he will not, to the detriment of the Company, at any time
during or after the termination of his employment, whether under
this Agreement or otherwise, reveal, divulge or make known to any
person (other than the Company or any of its Affiliates) or use
for his own benefit or purposes, or for the benefit or purposes
of any other person, any customer lists, trade secrets, formulae,
records, data, know-how or any secret or confidential information
whatsoever, including without limitation that used by the Company
or its Affiliates prior to the date of this Agreement or during
the Employment Term and made known (whether or not with the
knowledge and permission of the Company, whether or not
developed, devised or otherwise created in whole or in part by
the efforts of the Employee) to the Employee by reason of his
employment by the Company; provided that it shall not be a
violation of this Section 5 for the Employee to make any
disclosure (i) necessary or appropriate to the performance of his
duties hereunder or (ii) required by any law (including any court
or governmental order), so long as, in the case of disclosure
required by law, the Employee notifies the Company of such
requirement, where possible, and cooperates with the Company in
taking any reasonable steps to resist such disclosure (any costs
thereby incurred to be paid by the Company). The Employee
further covenants and agrees that he shall retain all such
knowledge and information which he shall acquire or develop
respecting such customers' lists, trade secrets, formulae,
records, data, know-how and secret or confidential information in
trust for the sole benefit of the Company and its successors and
assigns and upon leaving the employ of the Company shall return
all such documentation and information then in his possession to
the Company.
6. Inventions, etc. The Employee agrees that all inventions,
copyrightable material, secret processes, formulae, trademarks,
trade secrets and the like, discovered or developed by the
Employee while in the employ of the Company, whether in the
course of his employment or otherwise on such employer's time or
property, shall be disclosed promptly to the Company and shall,
if the Company elects in writing, be the exclusive property of
the Company. At the request of the Company the Employee shall
assign all such property to the Company, and the Employee agrees
to execute such instruments of transfer, assignment, conveyance
or confirmation and such other documents as may reasonably be
requested by the Company to transfer, confirm and perfect in the
Company all legally protected rights in any such inventions,
copyrightable material, secret processes, formulae, trademarks,
trade secrets and the like. This Section 6 shall not apply to any
property, the development and nature of which (i) is unrelated to
any business then being conducted, developed or actively being
considered for development by the Company, and (ii) is not
competitive with any such business.
7. Covenant Not to Compete.
7.1 The Employee agrees that for the period set forth in
Section 7.2 below, (the "No Compete Term"), he shall not, without
the prior written consent of the Company, directly or indirectly,
whether as principal, partner, stockholder or as agent, officer,
director, employee, consultant, or otherwise, alone or in
association with any other person, firm, corporation, or other
business organization, carry on, or be engaged, concerned or take
part in, or render services to, or own, share in the earnings of,
or invest in the stock, bonds or other securities of any person,
firm, corporation or other business organization which is engaged
in a business involving the manufacturing or selling of high-
speed, color printers and printing systems similar to such
printers and printing systems manufactured and sold by the
Company (the "Company Products") or in soliciting sales of any
products similar to and competitive with the Company Products
from any business that was a customer of the Company at any time
within 24 months immediately preceding the termination of the
Employee's employment or from any business to which the Company
attempted to sell its Company Products during such 24 month
period, and such restrictions will pertain to the following
geographic areas:
(a) within the world, but if a court should find it
unreasonable, then
(b) within North America, but if a court should find
it unreasonable, then
(c) within the Continental United States of America,
but if a court should find it unreasonable, then
(d) within the Northeast and New England states of the
U.S., but if a court should find it unreasonable, then
(e) within the New England states and New York, but if
a court should find it unreasonable, then
(f) within Connecticut and New York;
provided, however, that the Employee may (i) own or invest in
stocks, bonds or other securities of the Company and (ii) own or
invest in stocks, bonds or other securities of any other
corporation if such stocks, bonds or other securities are listed
on any national or regional securities exchange or have been
registered under Section 12(g) of the Securities Exchange Act of
1934; provided his investment does not exceed, in the case of any
class of the capital stock of any one issuer, 2 percent of the
issued and outstanding shares of such class, or, in the case of
bonds or other securities, 2 percent of the aggregate principal
amount thereof issued and outstanding; and such investment would
not prevent, directly or indirectly, the transaction of business
by the Company with any state, district, territory or possession
of the United States or any governmental subdivision, agency or
instrumentality thereof by virtue of any statute, law, regulation
or administrative practice.
7.2 If the Employee's employment is terminated
(a) for Cause, pursuant to Section 4.3, or
(b) as a result of the Employee's voluntary
termination, pursuant to Section 4.6 above,
the No Compete Term shall be the period ending on the first
anniversary of the termination of the Employee's employment. If
the Employee's employment is terminated for any reason other than
as described immediately above, the No Compete Term shall be
coincident with the Termination Period. Notwithstanding the
above, the Company may elect in writing to extend the No Compete
Term for a period of up to three years, provided that the Company
shall (i) compensate the Employee for any period with respect to
which it elects to extend the No Compete Term (beyond any period
of salary continuation) at an annual rate equal to the base
salary as in effect on the last day of the Employee's employment,
to be paid annually in advance and (ii) provide the Employee, at
the Company's sole expense, health benefits for such period;
provided that if the Employee voluntarily terminates his
employment as a result of a reduction in compensation or benefits
as described in Section 4.5(a) above, the Employee's compensation
and benefits during the extended No Compete Term shall be
computed without regard to such reduction.
7.3 It is understood by and between the Parties hereto that
the foregoing covenant by the Employee not to enter into
competition as set forth in Section 7.1 hereof, and the covenant
by the Employee not to interfere with certain employees of the
Company as set forth in Section 9 below, are essential elements
of this Agreement and that, but for the agreement of the Employee
to comply with such covenants, the Company would not have entered
into this Agreement.
8. Business Materials, Covenant to Report. All written
materials, records and documents made by the Employee or coming
into his possession concerning the business or affairs of the
Company or any of its Affiliates, shall be the sole property of
the Company or its Affiliates, as the case may be, and, upon the
termination of his employment with the Company or upon the
request of the Company at any time, the Employee shall promptly
deliver any such documents then in his possession to the Company.
The Employee agrees to render to the Company such reports of the
activities undertaken by the Employee, or conducted under the
Employee's direction, pursuant hereto during the Employment Term
as the Company may reasonably request.
9. Non-Interference. The Employee agrees that during the No
Compete Term he will not, whether for his own account or for the
account of any other person, firm, corporation or other business
organization, interfere with the Company's relationship with, or
endeavor to entice away from the Company, any individual who at
any time during the term of the Employee's employment with the
Company was employed by the Company in an executive, managerial
or sales capacity. It shall not be a violation of this Section 9
for the Employee, while employed by the Company, to dismiss any
employee (or to take similar action with regard to any employee)
if such action is taken in good faith in the performance of the
Employee's duties and responsibilities here under.
10. Specific Performance. Without intending to limit the
remedies available to the Company, the Employee further agrees
that damages at law will be an insufficient remedy to the Company
in the event that the Employee violates the terms of Section 5,
6, 7, 8 or 9, and that the Company may apply for and have
injunctive relief in any court of competent jurisdiction to
restrain the breach or threatened breach of or otherwise to
specifically enforce any of the covenants of such Sections.
11. Compliance with Other Agreements. The Employee represents
and warrants to the Company that, to the best of the Employee's
knowledge, the execution of this Agreement by him and his
performance of his obligations hereunder will not, with or
without the giving of notice and/or the passage of time, conflict
with, result in the breach of any provision of or the termination
of, or constitute a default under, any agreement to which the
Employee is a party or by which the Employee is or may be bound.
12. Binding Effect; Benefits. This Agreement shall inure to the
benefit of, and shall be binding upon, the Parties hereto and
their respective successors, assigns, heirs and legal
representatives. Insofar as the Employee is concerned, this
contract, being personal, cannot be assigned except that the
Employee's rights to compensation and benefits may pass to the
Employee's Beneficiary as provided hereinabove, and may pass by
will or operation of law. The Company may not assign this
Agreement, except that such rights or obligations may be assigned
or transferred pursuant to a merger, consolidation or sale of the
Company, provided that the assignee or transferee assumes the
liabilities, obligations and duties of the Company, as contained
in this Agreement, either contractually or as a matter of law.
13. Notices. All notices and other communications which are
required or may be given under this Agreement shall be in writing
and shall be deemed to have been duly given if delivered
personally, by courier or registered or certified mail, return
receipt requested, postage prepaid, to the Party being notified
at the following address, or to such other address as the Party
shall have specified by notice in writing to the other Party:
(a) if to the Employee, to him at the address
hereinabove first mentioned, and
(b) if to the Company, to it at:
Accent Color Sciences, Inc.
000 Xxxxxxxxxxx Xxxxxxxxx
Xxxx Xxxxxxxx, XX 00000
Attention: Corporate Secretary
All such notices and communications shall be deemed to have been
received on the date of delivery thereof.
14. Entire Agreement. This Agreement contains the entire
agreement between the Parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and
understandings, oral or written, between the Parties hereto with
respect to the subject matter hereof.
15. Amendments and Waivers. This Agreement may not be modified
or amended except by an instrument or instruments in writing
signed by the Party against whom enforcement of any such
modification or amendment is sought. Either Party hereto may, by
an instrument in writing, waive compliance by the other Party
with any term or provision of this Agreement on the part of such
other Party hereto to be performed or complied with. The waiver
by any Party hereto of a breach of any term or provision of this
Agreement shall not be construed as a waiver of any subsequent
breach.
16. Section and other Headings. The section and other headings
contained in this Agreement are for reference purposes only and
shall not be deemed to be a part of this Agreement or to affect
the meaning or interpretation of this Agreement.
17. Separability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction; provided, however, that
if the provisions of Section 7 or Section 9 should be or become
invalid, illegal or unenforceable under the laws of the State of
Connecticut, the restrictions contained in such section shall be
deemed to be modified so that, as modified, said restrictions
shall be valid, legal and enforceable in accordance with the
intent expressed in Section 7 or 9, as the case may be. This
Section shall be interpreted so as to be consistent with the
operation of Section 7.1 above.
18. Governing Law. This Agreement shall be construed and
governed in accordance with the laws of the State of Connecticut
and the United States of America, without regard to principles of
conflict of laws.
19. Resolution of Disputes. Any controversy or claim arising
out of or relating to this Agreement, or any breach thereof,
shall be settled by arbitration in accordance with the rules of
the American Arbitration Association (the "AAA") before a single
arbitrator chosen by the Parties from a list provided by the AAA.
Judgment upon an award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. The arbitration shall
be held in Hartford, Connecticut or in such other place as the
Parties may agree. Each of the Company and the Employee shall
bear its or his own costs of the arbitration including, but not
limited to, fees and disbursements of counsel, provided that in
the event the Employee shall prevail the Company shall pay all of
the Employee's costs.
IN WITNESS WHEREOF, the Parties hereto have duly executed
this Agreement on the date first above written.
ACCENT COLOR SCIENCES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Its President and
Chief Executive Officer
/s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
