EMPLOYMENT AGREEMENT
EXHIBIT 10.8
THIS AGREEMENT is made as of January 31, 2005, between DataWave Systems, Inc., a Delaware Corporation (the “Corporation”), and Xxxxxx Xxxxxxx (the “Employee”).
The Corporation wishes to retain the services of the Employee and the Employee wishes to be employed by the Corporation. The Employee has detailed knowledge of various aspects of the Corporation’s business and is in possession of proprietary and confidential information concerning the business. The disclosure of such information or the engaging in competitive activities would cause substantial harm to the Corporation.
(a) For all services rendered by the Employee pursuant to this Agreement, during the term of this Agreement the Corporation shall pay the Employee a salary at the annual rate of $240,000, which salary shall be cumulatively increased by no less than 5% upon each
anniversary date of employment. Said salary may be further increased from time to time by the Board in its sole discretion. Payments hereunder shall be made at the same frequency as payments made to other employees of the Corporation. In exercising such discretion, the Board of Directors shall, not less than once each year, assess the Employee’s performance relative to performance criteria discussed by the Board with the Employee and adopted by the Board at the beginning of such year.
(b) At the sole discretion of the Board, the Corporation may grant to the Employee Stock Options as it is deemed appropriate up to maximum of 5% of outstanding shares of the Corporation.
(c) At any time, at the sole discretion of the Board, the Corporation may grant to the Employee a bonus in such amount and in such form as it is deemed appropriate, provided that during the term of the Agreement the Employee may earn a bonus of up to seventy-five percent (75%) or pro rata of his annual salary as follows:
1. | 75% of Base Salary by exceeding the approved operating Business Plan of the Company by 10%. | |||
2. | 60% of Base Salary by meeting the approved operating Business Plan of the Company. | |||
3. | 25% of Base Salary by meeting 75% of the approved operating Business Plan of the Company. | |||
4. | 25% of Base Salary by meeting other objectives determined by the Board of Directors annually. |
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directly or indirectly, individually or as a consultant to, or as an officer, director, employee, equity owner or agent of, or otherwise participate in the ownership or operation of any business providing similar products and services as the Corporation in the geographical areas served by the Corporation and its subsidiaries at the time of such termination, but nothing contained herein shall be deemed to prohibit the Employee from investing in any company engaged in such business, the stock of which is available in a public securities market; provided, however, that the Employee shall not own in excess of 5% of the total issued and outstanding stock of such company.
During the term of this Agreement and for a period of one (1) year after the termination of such employment, regardless of the reason for such termination, the Employee will not, directly or indirectly, solicit or endeavor to entice away from the Corporation or any of its subsidiaries, or otherwise materially interfere with the business relationship of the Corporation or any subsidiary with, (i) any person who is, or was within the one (1) year period immediately prior to the termination of the Employee’s employment with the Corporation, employed by or associated with the Corporation or any subsidiary or (ii) any person or entity who is, or was within such one (1) year period, a customer or client of, supplier to or other party having material business relations with the Corporation or any subsidiary.
The Employee acknowledges that a breach of any of the covenants contained in this paragraph 7 would result in irreparable injury to the Corporation for which there may be no adequate remedy at law and that, in the event of an actual or threatened breach by the Employee of the provisions of this paragraph 7, the Corporation shall be entitled to pursue and obtain injunctive relief restraining the Employee from doing any act prohibited hereunder. Nothing contained herein shall be construed as prohibiting the Corporation from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of any monetary damages to which it would be entitled under the law. In the event that any provision of this paragraph 7 is held to be unenforceable as a result of it being too broad, either in terms of time or geographical extent, the Employee agrees that the court can adapt and limit this paragraph 7 so as to make the provisions hereof enforceable to the fullest extent permissible.
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(a) In the event that Employee is absent from employment by reason of illness or other incapacity by which Employee is unable to perform the essential functions of his position for more than six (6) consecutive months during the term of this Agreement, the Corporation may at its option terminate this Agreement. If the Corporation elects not to terminate, the Corporation shall be obligated to continue to pay the Employee compensation hereunder.
(b) If the Employee dies during the term of this Agreement, the Corporation shall pay to the Employee’s estate in a lump sum within 30 days after the date of death an amount equal to 25% of the Employee’s annual salary rate then payable to the Employee pursuant to paragraph 4 of this Agreement.
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further obligation to make any payments or provide any benefits hereunder (except, where applicable, the payments required under paragraph 10) or under paragraph 13A below.
(a) In the event that (i) the duties and responsibilities of Employee are at any time significantly changed (by diminution, increase or other significant alteration) from the duties and responsibilities presently exercised by him or (ii) there is a “Change in Control” (as hereinafter defined) of the Corporation, Employee may at his election, at any time within one year after either of such events, terminate this Agreement with 60 days prior written notice and Employee shall be entitled to the following compensation, in lieu of the other compensation and bonuses provided herein:
(A) | In lieu of any further salary and bonus payments to Employee for periods subsequent to the termination, the Corporation shall pay as severance pay to Employee, no later than the thirtieth day following the effective date of termination, (x) a lump-sum severance payment equal to 150% of Employee’s annual salary rate in effect as of the termination, or if greater, such rate in effect immediately prior to the Change in Control of the Corporation and (y) an amount equal to 150% of any bonus received by him for the previous year. | |||
(B) | For a twelve (12) month period after such termination, the Corporation shall arrange to provide Employee with life, disability, and accident and group health insurance benefits substantially similar to those that Employee was receiving immediately prior to the termination. |
(b) Employee shall not be required to mitigate the amount of any payment provided for in this paragraph 13 by seeking other employment or otherwise.
(c) For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred if (i) any “person” or group of “persons” (as the term “person” is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) (other than persons (A) holding equity interests or (B) with whom the Corporation has entered into definitive agreements regarding the purchase of equity interests, as of the first day of the term date of this Agreement and their affiliates, and other than the Employee) becomes the beneficial owner, directly or indirectly, of securities of the Corporation representing 50% or more of the combined voting power of the then outstanding securities of the Corporation; (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors, and any new director whose election or nomination was approved by the directors in office who either were directors at the beginning of the period or whose election or nomination was previously so approved, cease for any reason to constitute at least a majority thereof; or (iii) the stockholders of the Corporation approve a merger or consolidation of the Corporation with any other entity, other than a merger or consolidation which would result in the voting securities of the
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Corporation outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) more than 50% of the combined voting power of the voting securities of the Corporation or such surviving entity outstanding immediately after such merger or consolidation.
14. Effective Date. This Agreement shall become effective as of the date of this Agreement.
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20. Entire Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof. It may be changed only by an agreement in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought. This Agreement shall be construed in accordance with and governed by the laws of the State of New Jersey without giving effect to principles of conflicts of laws. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
/s/ Xxxxx Xxxxxx | ||||
Chairman of Compensation Committee | ||||
/s/ Xxxxxx Xxxxxxx | ||||
Xxxxxx Xxxxxxx | ||||
00 Xxxxxxx Xxxxx | ||||
Xxxxx, XX 00000 | ||||
XXX |
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