EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") made as of the 1st day of June,
2000 by and between Xxxxxxxx Xxxx (hereinafter referred to as "Employee") and
DUALSTAR TECHNOLOGIES CORPORATION, a Delaware corporation having its principal
place of business at 00-00 00xx Xxxxxx, Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
(hereinafter referred to as the "Company").
1. Employment. The Company hereby employs Employee and Employee agrees
to work for the Company with the title specified on Schedule A below during the
Term (as defined below) of and upon the terms and conditions set forth in this
Agreement.
2. Compensation/Benefits. (a) Base Salary. During the Term of this
Agreement, the Company agrees to pay Employee the base annual salary specified
on Schedule A below ("Base Salary"). Such Base Salary shall be reviewed no less
frequently than annually during the term of this Agreement and may be increased
but not decreased by the Company's board of directors in its sole and absolute
discretion, after taking into consideration a variety of factors, including,
without limitation, the performance of the Employee and the Company and the base
salary (and raises) paid by comparable companies to employees having comparable
responsibilities. In the event of any increase, the increased amount shall
become the Base Salary. Such Base Salary shall be payable in accordance with the
Company's normal business practices or in such other amounts and at such other
times as the parties may mutually agree.
(b) Bonuses. On account of each year of the Term of this Agreement, the
Company agrees to pay to Employee a bonus equal to 10% (ten percent) of the net
income before taxes of the Company's High-Rise Electric subsidiary, calculated
in a manner consistent with past practices and GAAP.
(c) Benefits/Vacation. During the Term of this Agreement, the Company
also shall provide Employee with such other benefits, including medical,
disability, pension and severance plans, as are made generally available to
executive employees of the Company from time to time. Employee shall be entitled
to three weeks as vacation and such personal and sick benefit days during each
year of the Term in accordance with standard Company policies.
(d) Life Insurance. Subject to Employee's submitting to any required
physical examinations, the Company shall purchase and maintain in effect a term
insurance policy with a face amount of one times Employee's Base Salary or other
greater amount as may be specified in the Company's executive benefit policies
or plans on the life of Employee and shall permit Employee to designate the
beneficiary thereof.
3. Services. Employee agrees to devote substantially all of his working
time, attention and energies to the business of the Company and its Affiliates
under the general direction of the President and Chief Executive Officer and the
Company's board of directors acting through its Chairman. Nothing herein shall
be interpreted to preclude Employee from participating as an officer or director
of, or advisor to, any charitable or other tax exempt or civic organization.
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4. Term. The term of this Agreement (the "Term" or the "Term of this
Agreement") shall commence on April 1, 2000 and shall continue through the Date
of Termination, as hereinafter defined. Agreement to expire on July 1, 2002.
5. Early Termination. (a) In General. The Employee's employment
hereunder shall terminate and, other than the obligations listed in Paragraph
5(b), the Company's obligations hereunder shall cease, including the obligation
to pay compensation for any period after the date of termination on the Date of
Termination. The Date of Termination shall be (i) in the case of the death of
the Employee, the date of death; (ii) in the case of a termination by Employee,
the last date to be worked as specified in a written notice delivered by
Employee to the Company, which shall be not less than two weeks following the
date that such notice is given; (iii) in the case of a termination by the
Company other than for Cause (as defined below), the date set forth in a written
notice delivered by the Company to Employee, which date shall be not less than
two weeks following upon written notice following the date that such notice is
given; or (iv) in the case of a termination by the Company for Cause (as defined
below), the date upon which written notice of such termination is delivered to
Employee.
"Cause" shall mean that the Employee has acted with willful misconduct
or gross negligence in connection with the performance of his duties hereunder,
which conduct has materially injured the Company, or has been convicted of, or
entered a plea of nolo contendere to, a felony. Upon the Date of Termination,
the Term of this Agreement shall expire. Notwithstanding the foregoing, the
Employee shall not be deemed to have been terminated for Cause arising out of an
act of willful misconduct or gross negligence without (a) no less than ten (10)
days prior written notice to the Employee setting for the reasons for the
Company's intention to terminate for Cause, (b) an opportunity for the Employee
to be heard (together with comments of counsel) before the Board of Directors of
the Company, and (c) delivery to the Employee of a notice of termination from
the Board of Directors of the Company stating its opinion that the Employee has
acted with willful misconduct or gross negligence and specifying the particulars
thereof.
(b) Payments Upon Termination. (i) Upon termination of this Agreement
for any reason, Employee shall be entitled to all compensation and benefits
earned but not yet paid up to and including the termination date, including Base
Salary, pro rata bonus, if any, in the year of termination (payable in
accordance with Company policy), and any other incentive compensation. Unless
otherwise specified in this Agreement, unused vacation shall be treated in
accordance with Company policy.
(ii) In the event of Employee's (A) termination of employment or this
Agreement by the Company other than for Cause, or (B) termination of employment
by Employee for "Good Reason" (as defined below), in addition to the Company's
obligations set forth in subparagraph (i) above, Employee shall be entitled to
severance in an amount equal to one full year of Base Salary (the "Severance
Amount"), all unvested Options then held by Employee shall immediately vest and
Employee shall retain all rights to the Options, but shall have a period of nine
(9) months following the Date of Termination in which to exercise such Options,
in accordance with the option agreement governing such options (the "Option
Agreement"), and Employee shall continue to receive employee benefits for a
period of six months following the
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Date of Termination and the Employee's eligible dependents will continue to
participate in all of Company's health and welfare plans (or Company-provided
equivalent benefits) in which such dependents participated prior to the Date of
Termination, subject to the Employee continuing to make any required
contributions for such participation. Following such 6-month period, Employee
shall be entitled to all benefits ordinarily accorded terminated employees of
the Company. The Company's obligation to make the foregoing employee benefits
available to Employee and his eligible dependents shall cease upon Employee
becoming eligible for comparable benefits from a subsequent employer. Effective
upon the Date of Termination pursuant to clause (A) or (B) above, in
consideration of the payment of the Severance Amount and as a condition to the
payment thereof, Employee acknowledges that payment of the Severance Amount and
the provision of the other benefits contemplated hereby shall constitute
complete satisfaction of all obligations owed by the Company to the Employee and
shall further constitute Employee's sole remedy against the Company.
(iii) In the event of a termination by Employee other than for Good
Reason, in addition to the Company's obligations set forth in subparagraph (i)
above, Employee shall retain that portion of the Options which have vested prior
to the Date of Termination, but shall have a period of ninety (90) days from the
Date of Termination in which to exercise such Options. In the event of a
termination by the Company for Cause, the provisions of Section 5(f) below shall
govern.
(iv) In the event of a termination of employment by reason of
Employee's death or disability, in addition to the Company's obligations set
forth in subparagraph (i) above, all unvested Options then held by Employee (or
his estate, if applicable) shall immediately vest and Employee (or his estate)
shall retain all rights to the Options, but shall have a period of eighteen (18)
months from the Date of Termination in which to exercise such Options.
(c) Method of Payment. The Company shall pay the Severance Amount in a
lump sum not later than ten (10) days after the Employee's last day of active
employment (the "Effective Date"), provided, however, that at Employee's option,
the Severance Amount shall be payable to Employee in the form of equal periodic
payments ("Deferred Payment") according to the Company's regular payroll
schedule or at any other intervals elected by Employee for a period commencing
on the first regular payroll pay date beginning after the Effective Date (the
"Deferred Payment Period"). In order to receive Deferred Payment during a
Deferred Payment Period, Employee must elect such Deferred Payment in writing
and specify the Deferred Payment Period, which may not exceed the number of
months of Base Monthly Salary payable to Employee as the Severance Amount. In
the event of Employee's death during the Deferred Payment Period, any unpaid
Deferred Payment shall be paid in a lump sum to such beneficiary or
beneficiaries designated by Employee in writing or, failing such designation, to
Employee's spouse if Employee is married or to Employee's estate if Employee is
unmarried. In no event shall Employee be required to mitigate his damages
arising out of any termination of this Agreement by the Company or by Employee .
(d) Good Reason. For purposes of this Agreement, Good Reason shall
mean, with respect to Employee, (i) the assignment to Employee of any duties
materially inconsistent with, or substantially reduced as compared to, those set
forth in Section 1 or Schedule A, excluding for
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this purpose an isolated, insubstantial and inadvertent action not taken in bad
faith and that is remedied by the Company promptly after receipt of notice
thereof given by Employee; (ii) any material reduction in Employee's Base
Salary, opportunity to earn annual bonuses or other compensation or employee
benefits, other than as a result of an isolated and inadvertent action not taken
in bad faith and that is remedied by the Company promptly after receipt of
notice thereof given by Employee; (iii) the Company's requiring Employee to
relocate his principal place of business to a place that is not within a 00-xxxx
xxxxxx xx Xxxx Xxxxxx Xxxx, XX, (iv) any purported termination of this Agreement
by the Company otherwise than as expressly permitted by this Agreement, or (v) a
"Change of Control" of High-Rise Electric. For purposes hereof, a "Change of
Control" of the Company shall be deemed to have occurred if, after the date
hereof, (i) any person or two or more persons acting in concert, other than the
Company, any employee benefit plan sponsored by the Company, Cerberus Capital
Management, L.P., Blackacre Capital Management LLC, Technology Investors Group,
LLC or any of their Affiliates, acquires beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended (the "'34 Act") directly or indirectly of fifty percent (50%) or more of
the total voting power represented by the Company's then outstanding voting
securities (calculated as provided in paragraph (d) of Rule 13d-3 under the '34
Act in the case of rights to acquire voting securities); or (ii) any person or
two or more persons acting in concert, other than the Company, any employee
benefit plan sponsored by the Company, Cerberus Capital Management, L.P,
Blackacre Capital Management LLC, Technology Investors Group, LLC or any of
their Affiliates, shall purchase shares of the Company pursuant to a tender
offer or exchange offer to acquire any voting securities of the Company (or
securities convertible into such voting securities) for cash, securities or any
other consideration, provided that after the consummation of the offer, the
person or persons in question has beneficial ownership directly or indirectly of
fifty percent (50%) or more of the total voting power represented by the
Company's then outstanding voting securities (all as calculated under clause (i)
above)); or (iii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation (other than a merger of the Company in which
holder of the Common Shares of the Company immediately prior to the merger have
the same proportionate ownership of common stock of the surviving corporation
immediately after the merger as immediately before), or pursuant to which Common
Shares of the Company would be converted into cash, securities or other
property, or (B) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all of the assets
of the Company, other than a sale, lease, exchange or other transfer of all or
substantially all assets of the Company to Cerberus Capital Management, L.P.,
Blackacre Capital Management, LLC, Technology Investors Group, LLC or any of
their affiliates; or (iv) a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the '34 Act, whether or not the Company is then subject to
such reporting requirement; or (v) there shall have been a change in the
composition of the Board of Directors of the Company at any time during any
consecutive twenty-four (24) month period such that "continuing directors" cease
for any reason to constitute at least a 70% majority of the Board. For purposes
of this clause, "continuing directors" means those members of the Board who
either were directors at the beginning of such twenty-four month period or were
elected by or on the nomination or recommendation of at least a 70% majority of
the then-existing "continuing directors." So long as there has not been a
"change of control" within the meaning of clause (v), the Board of Directors may
adopt by a 70% majority
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of the "continuing directors" a resolution to the effect that an event described
in clauses (i) or (ii) shall not constitute a "change of control."
(e) Disability. If Employee shall become unable efficiently to perform
the essential functions of his job, even with reasonable accommodation, as a
result of a disability or illness, as such terms are defined by the Americans
with Disabilities Act, he shall be entitled to his regular compensation until
the total period of disability or illness (whether or not continuous and whether
or not the same disability or illness) shall exceed 60 days during any calendar
year in the Term hereunder. This Agreement may thereafter be terminated by the
Company and, subject to the terms of paragraph (b) above, the Company's
obligations hereunder shall cease, including the obligation to pay compensation
for any period after the Date of Termination. Any amounts payable as
compensation during the period of disability or illness, shall be reduced by any
amounts paid during such period under any disability plan or similar insurance
maintained by the Company for Employee's benefit.
(f) Cause. Upon a termination for Cause, Employee shall receive Base
Salary through the Date of Termination, and all other entitlement to benefits or
bonuses shall cease immediately, and all stock options not yet fully vested and
exercised shall be forfeited. Employee shall retain that portion of the Options
that have vested prior to the Date of Termination for Cause, but shall have a
period of 90 days from the Date of Termination in which to exercise such
Options.
(g) Change of Control. As used herein, a "Change of Control" of the
Company shall be deemed to have occurred if, after the date hereof, (i) any
person or two or more persons acting in concert, other than the Company, any
employee benefit plan sponsored by the Company, Cerberus Capital Management,
L.P., Blackacre Capital Management LLC, Technology Investors Groups, LLC or any
of their Affiliates, acquires beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the
"'34 Act") directly or indirectly of fifty percent (50%) or more of the total
voting power represented by the Company's then outstanding voting securities
(calculated as provided in paragraph (d) of Rule 13d-3 under the '34 Act in the
case of rights to acquire voting securities); or (ii) any person or two or more
persons acting in concert, other than the Company, any employee benefit plan
sponsored by the Company, Cerberus Capital Management, L.P, Blackacre Capital
Management LLC, Technology Investors Group, LLC or any of their Affiliates,
shall purchase shares of the Company pursuant to a tender offer or exchange
offer to acquire any voting securities of the Company (or securities convertible
into such voting securities) for cash, securities or any other consideration,
provided that after the consummation of the offer, the person or persons in
question has beneficial ownership directly or indirectly of fifty percent (50%)
or more of the total voting power represented by the Company's then outstanding
voting securities (all as calculated under clause (i) above)); or (iii) the
shareholders of the Company shall approve (A) any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation
(other than a merger of the Company in which holder of the Common Shares of the
Company immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger as
immediately before), or pursuant to which Common Shares of the Company would be
converted into cash, securities or other property, or (B) any sale, lease,
exchange or other transfer (in one transaction
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or a series of related transactions) of all or substantially all of the assets
of the Company, other than a sale, lease, exchange or other transfer of all or
substantially all assets of the Company to Cerberus Capital Management, L.P.,
Blackacre Capital Management, LLC, Technology Investors Group, LLC or any of
their affiliates; or (iv) a change in control of a nature that would be required
to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the '34 Act, whether or not the Company is then subject to
such reporting requirement; or (v) there shall have been a change in the
composition of the Board of Directors of the Company at any time during any
consecutive twenty-four (24) month period such that "continuing directors" cease
for any reason to constitute at least a 70% majority of the Board. For purposes
of this clause, "continuing directors" means those members of the Board who
either were directors at the beginning of such twenty-four month period or were
elected by or on the nomination or recommendation of at least a 70% majority of
the then-existing "continuing directors." So long as there has not been a
"change of control" within the meaning of clause (v), the Board of Directors may
adopt by a 70% majority of the "continuing directors" a resolution to the effect
that an event described in clauses (i) or (ii) shall not constitute a "change of
control."
6. Employer's Authority. Employee agrees to observe and comply with the
rules and regulations of the Company as adopted by the Company's board of
directors respecting the performance of his duties and to carry out and perform
orders, directions and policies communicated to him from time to time,
consistent with his position and with past practices.
7. Expenses. During the Term of this Agreement, the Company shall
reimburse Employee for the reasonable business expenses incurred by Employee in
the course of performing his duties for the Company hereunder in accordance with
the procedures then in place for such reimbursement.
8. Non-Disclosure and Non-Competition. Employee has executed a
Nondisclosure Agreement of the Company attached hereto as Exhibit 1. In
addition, during the Term and for a further period of one year thereafter,
Employee shall not participate, without the written consent of the Company, in
the management or control of, or act as an employee or officer of, any business
operation which engages in any activity which is primarily engaged in or
competes significantly with the material telecommunications businesses conducted
by the Company and High Rise Electric or any of its Affiliates (the
"Companies"). Such covenant shall apply within all territories in which the
Companies are actively engaged in business or are actively soliciting business.
The parties agree that if any portion of this Paragraph 8 shall be deemed by any
court or agency to be unreasonable and/or unenforceable, then it shall be
modified to the extent necessary to make it enforceable by such court or agency.
9. Survival. The last sentence of Paragraph 5(b)(ii), Paragraph 8 and
Paragraph 14 of this Agreement shall survive termination of employment hereunder
and of this Agreement.
10. Execution, Delivery and Performance. To the best of Employee's
knowledge, the execution, delivery and performance by Employee of this Agreement
or any other agreement, instrument or document contemplated herein or hereby
will not result in a breach of or conflict with any terms of any other
agreement, instrument or document to which Employee is a party or by which
Employee or his property is bound. No consent or approval of any person or
entity,
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other than those that have been obtained by Employee, is required for Employee
to execute, deliver and perform its obligations under this Agreement or any
agreement, instrument or document contemplated herein or hereby.
11. Notices. Any notice permitted or required hereunder shall be deemed
sufficient when hand-delivered or mailed by certified mail, postage prepaid, and
addressed if to the Company at the address indicated above and if to the
Employee at the address indicated below (or to such other address as may be
provided by written notice received at least five (5) business days prior to the
hand delivery or mailing of any such notice).
12. Miscellaneous. (a) This Agreement (i) constitutes the entire
agreement between the parties concerning the subjects hereof and supersedes any
and all prior agreements or understandings, (ii) may not be assigned by Employee
without the prior written consent of the Company, and (iii) may be assigned by
the Company to any Affiliate of the Company or to the successors or assigns of
the Company, provided such successors or assigns carry on substantially the
Company's telecommunications business as conducted at the time of assignment and
shall be binding upon, and inure to the benefit of, any such Affiliate,
successor or assign.
(b) Headings herein are for convenience of reference only and shall not
define, limit or interpret the contents hereof.
(c) As used herein, the term "Affiliate" shall mean any entity
controlled by or under common control with another person.
13. Amendment. This Agreement may be amended, modified or supplemented
by the mutual consent of the parties in writing, but no oral amendment,
modification or supplement shall be effective.
14. Specific Enforcement. The parties acknowledge that the Company
would be irreparably damaged and there would be no adequate remedy at law for
the Employee's breach of Paragraph 8 of this Agreement, and accordingly, the
terms thereof shall be specifically enforced. Employee hereby consents to the
entry of any temporary restraining order or preliminary injunction, in addition
to any other remedies available at law or in equity, to enforce the provisions
hereof, provided sufficient facts are shown to warrant such relief. In the event
that any action is brought to enforce Paragraph 8 hereof, the prevailing party
shall be entitled to recover its costs and attorneys fees in addition to any
other relief granted.
15. Severability. The provisions of this Agreement are severable. The
invalidity of any provision shall not affect the validity of any other
provision.
16. Governing Law; Arbitration. This Agreement shall be construed and
regulated in all respects under the laws of the State of New York without regard
to its conflict of laws principles. Any dispute, controversy or questions
arising under, out of, or relating to this Agreement of Employee's employment
with the Company or termination thereof, shall be referred for arbitration in
the State of New York to a single neutral arbitrator selected by the Employee
and Company and this shall be the exclusive and sole means of resolving any such
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dispute. The arbitration proceeding shall be governed by the Employment Rules of
the American Arbitration Association then in effect or such rules last in effect
(in the event such Association is no longer in existence) but shall not be
conducted under the auspices of the Association, and the decision of the
arbitrator shall be governed by the rule of law. If the parties are unable to
agree upon a neutral arbitrator within thirty (30) days after each party has
given the other written notice of the desire to submit a dispute, controversy or
question for decision as aforesaid, then either party may apply to the CPR of
New York City for the appointment of a neutral arbitrator or, if the CPR is not
then in existence or does not desire to act in the matter, either party may
apply to the Presiding Judge of the appropriate court for the appointment of a
neutral arbitrator to hear the parties and settle the dispute, controversy or
question. Such right to submit a dispute, controversy or question arising
hereunder to arbitration and the decision of the neutral arbitrator shall be
final, conclusive and binding on all parties and interested persons and no
action at law or in equity shall be instituted or, if instituted, further
prosecuted by either party other than to enforce the award of the neutral
arbitrator. The arbitrator shall take submissions and hear testimony, if
necessary, and shall render a written decision as promptly as possible, The
arbitrator may require any form of discovery (e.g., depositions) in making his
decision. In connection with any arbitration, the prevailing party shall be
entitled to recover its costs and reasonable attorneys' fees in addition to
other relief granted.
IN WITNESS WHEREOF, this Agreement is entered into as of the date and
year first above written.
DUALSTAR TECHNOLOGIES EMPLOYEE:
CORPORATION
By: /s/ /s/
Name: Xxxxxxx Xxxxx Name: Xxxxxxxx Xxxx
Title: President & CEO
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SCHEDULE A
Name: Xxxxxxxx Xxxx
Title: Vice President, High-Rise Electric
Base Salary: $260,000
Home Address:
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