EMPLOYMENT AGREEMENT
AGREEMENT, dated as of December 31, 1998, between Eastbrokers
International, Inc., a Delaware corporation ("Company") and Xxxxx X. XxXxxx
("Employee");
WHEREAS, the Employee is currently serving as Executive Vice
President, Chief Financial Officer, Secretary and Treasury, of the Company;
WHEREAS, the parties desire to enter into this Agreement setting
forth the terms and conditions for the employment relationship of the Employee
with the Company;
WHEREAS, the Board of Directors of the Company ("Board") has approved
and authorized the entry into this Agreement with the Employee;
NOW, THEREFORE, it is AGREED as follows;
1. Employment. During the term of this Agreement the Employee shall
be employed as Executive Vice President, Chief Financial Officer, Secretary and
Treasury, of the Company. The Employee shall render executive policy and other
management services to the Company of the type customarily performed by persons
serving in similar executive officer capacities. The Employee shall devote such
portion of his working time to the Company as is reasonably necessary to the
business of the Company. During the term of this Agreement, there shall be no
material increase or decrease in the duties and responsibilities of the Employee
otherwise than as provided herein, unless the parties otherwise agree in
writing.
2. Compensation.
(a) Salary. The Company agrees to pay the Employee during the
term of this Agreement a salary at an annual rate equal to $120,000, with such
subsequent increases in salary during the term of this Agreement as may be
determined by the board. In determining salary increases, the Board may
compensate the Employee for increases in the cost of living and may also provide
for performance or merit increases. The salary of the Employee shall not be
decreased at any time during the term of this Agreement from the amount then in
effect unless the Employee otherwise agrees in writing. Participation in
deferred compensation, discretionary bonus, retirement and other employee
benefit plans and in fringe benefits shall not reduce the salary payable to the
Employee under this Section 2(a). The salary under this Section 2(a) shall be
payable to the Employee not less frequently than monthly. The Employee shall not
be entitled to receive fees for serving as a director of the Company or of any
subsidiary or affiliate of the Company or for serving as a member of any
committee of any such board of directors.
(b) Performance Bonus. In addition to his salary under Section
2(a) above, the Company will pay to the Employee a quarterly Performance bonus
of 1/4 of 1% of total revenue of the Company in excess of $6,000,000 per
quarter. The performance bonus shall be payable 30 days following the filing of
the Company's quarterly 10-Q and Annual Report 10-K. The Employee will not be
entitled to such performance bonus during any quarter in which the Company's
quarterly 10-Q or Annual Report 10-K is extended or filed late, as defined by
the rules an regulations of the Securities and Exchange Commission.
3. Long Term Stock Incentive. In consideration for Employee
entering into this five year employment Agreement, the Company has deemed it
advisable and in the best interests of the Company that it enter into an
Agreement with Employee relating to the sale of shares of stock in the Company,
whereby, the Company agrees to sell to Employee 50,000 shares of its Common
Stock, par value $.05, of the Company at a price of $3.00 per share in exchange
for Employee issuing to the Company a Promissory Note in the amount of $150,000
with principal and interest on the Note payable to the Corporation three years
from the making of said Note.
4. Insurance, Retirement, Benefit Plans; Fringe Benefits;
Business Expenses.
(a) Life Insurance. The Company will pay the premiums on a
life insurance policy on the life of the Employee providing a death benefit of
not less than $1,000,000 ("Policy"). The Company will be the owner of such life
insurance policy and upon the death of the Employee, the Company would be paid
from the insurance proceeds an amount equal to the total premiums it paid under
the Policy, with the remaining proceeds to be paid to the Employee's designated
beneficiary.
(b) Other Benefits and Perquisites. The Employee shall be
entitled to participate in any plan of the Company relating to stock options,
restricted stock, employee stock purchase or ownership, pension, thrift, profit
sharing, group life insurance, medical coverage, education or other retirement
or employee benefit plans or arrangements that the Company has adopted or may
adopt for the benefit of its employees or executive officers. The Employee shall
also be entitled to participate in, or enjoy the benefit of any other fringe
benefits or perquisites that are now or may be become applicable to the
Company's executive employees. The Employee shall also be provided with the use
of a suitable automobile at Company expense. The Employee shall account to the
Company for the business use of such automobile.
(c) Business Expenses. During the term of the employee's
employment by the Company, the Company shall promptly reimburse the Employee for
all reasonable and customary expenses incurred by the Employee in performing
services for the Company, including all expenses of travel and living expenses
while away from home on business or at the request of and in the service of the
Company, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company.
5. Term. The initial term of employment under this Agreement shall be
for the three year period. This Agreement shall be automatically renewed for an
additional three-year term, unless either Employee or the Company gives contrary
written notice to the other party hereto not less than 180 days before the
scheduled expiration of the term of this Agreement. Each term and all such
renewed terms are collectively referred to herein as the term of this Agreement.
6. Voluntary Absences: Vacations. The Employee shall be entitled,
without loss of pay, to be absent voluntarily for reasonable periods of time
from the performance of the duties and responsibilities under this Agreement.
All such voluntary absences shall count as paid vacation time, unless the Board
otherwise approves. The Employee shall be entitled to an annual paid vacation of
at least six weeks per year or such longer period as the Board may approve. Such
vacation time accrues and vests without limit. The timing of paid vacations
shall be scheduled it' a reasonable manner by the Employee.
7. Termination of Employment. The Employee's employment may be
terminated without any breach of this Agreement only under the following
circumstances:
(a) Death. The Employee's employment shall terminate upon his
death.
(b) Disability. The Company may terminate the Employee's
employment because of disability. For this purpose, "Disability" shall mean the
inability of the Employee to perform his duties under this Agreement because of
physical or mental illness or incapacity for a continuous period of six months
during which the Employee shall have been absent from his duties under this
Agreement on a substantially full-time basis.
(c) Cause. The Company may terminate the Employee's employment
for Cause. For purposes of this Agreement, the Company shall have "Cause" to
terminate the Employee's employment only in the event of (l) the willful and
continued failure by the Employee to substantially perform his duties hereunder
(other than any such failure resulting from the Employee's inability to perform
such duties as a result of physical or mental illness or incapacity or any such
actual or anticipated failure after the delivery of a Notice of Termination, as
defined in Section 7(e), by the Employee for Good Reason, as defined in Section
7(d)(2), after delivery to the Employee of a written demand for substantial
performance that specifically identifies the manner in which the Company
believes that the Employee has not substantially performed his duties and a
reasonable opportunity to cure; (2) willful misconduct by the Employee that
causes substantial and material injury to the business and operations of the
Company, the continuation of which, in the reasonable judgment of the Board,
will continue to substantially and materially injure the business and operations
of the Company in the future; or (3) conviction of the Employee of a felony. No
act or failure to act shall be considered "willful" for this purpose unless
done, or omitted to be done, by the Employee other than in good faith and other
than with a reasonable belief that his action or omission was in the best
interests of the Company. The Employee shall not be deemed to have been
terminated for Cause unless the Employee shall have been provided with (i) a
reasonable notice setting forth the reasons that the Company believes constitute
Cause for the termination of his employment; (ii) a Notice of Termination as
defined in Section 7(e), from the Board finding that, in the reasonable good
faith opinion of the Board1 Cause for the termination exists and specifying the
particulars thereof in reasonable detail. In the event that the Employee's
employment has been terminated by the Company for Cause and the Employee
disputes in good faith whether such Cause has occurred, the Company shall
continue to make to the employee the payments contemplated by this Agreement as
if his employment had not been terminated upon the Company's receipt of a
written undertaking by the Employee to repay to the Company any amounts to which
it is ultimately determined that he was not entitled under this Agreement.
(d) Termination by the Employee.
(1) The Employee may terminate his employment (A) for
Good Reason by giving ten days prior written notice to the Company or (B) at any
time by giving 120 days prior written notice to the Company.
(2) For this purposes, "Good Reason" shall mean (A)
the assignment to the Employee of any duties inconsistent with the Employee's
titles and duties as set forth in Section 1 of this Agreement or any substantial
adverse alteration in the nature or status of the Employee's responsibilities;
(B) any change in the Employee's reporting responsibility such that the Employee
is required to report other than exclusively to the Board; (C) any purported
termination of the Employee's employment by the Company that is not effected
pursuant to a Notice of Termination satisfying the requirements of Section 7(e)
hereof; (D) any other failure by the Company to comply with any material
provision of this Agreement which failure continues for more than ten days after
written notice of such noncompliance from the Employee; or (E) any notices given
by the Company to the Employee under Section 5 hereof that this Agreement will
not be renewed on any anniversary date.
(e) Notice of Termination. Any termination of the Employee's
employment by the Company or by the Employee (other than termination pursuant to
Section 7(a) hereof) shall he communicated to the other party by a written
Notice of Termination. Any Notice of Termination given by a party shall specify
the particular termination provision of this Agreement relied upon by such party
and shall set forth in reasonable detail the facts and circumstances relied upon
as providing a basis for the termination under the provisions specified.
(f) Termination Date. The Termination Date shall mean (1) if
the Employee's employment is terminated by his death, the date of his death; (2)
if the Employee's employment is terminated pursuant to Section 7(b) hereof, the
date specified in the Notice of Termination, which shall be after the expiration
of the six-month period specified in that subsection; or (3) if (the Employee's
employment is terminated by the Company for Cause, the date specified in the
Notice of Termination.
8. Compensation Upon Termination of Employment.
(a) Termination because of Death for Cause or Without Good
Reason. If the Employee's employment is terminated because of his death, by the
Company for Cause or by the Employee other than for Good Reason, the Company
shall pay the Employee his salary and a pro rata portion of the bonus specified
in Section (2b) (based upon the bonus paid in respect of the preceding year)
through the Termination Date and the Company shall have no further obligation to
the Employee hereunder.
(b) Termination Because of Disability. If the Employee's
employment is terminated by the Company because of Disability under Section 7(b)
hereof the Company shall pay the Employee an annual disability benefit equal to
the excess of (l) 60 percent of his salary at the rate in effect under Section
2(a) hereof on the Termination Date plus 60 percent of the bonus amount
specified in Section 2(b) hereof (based upon the bonus paid in respect of the
preceding year) over (2) the amount of the long term disability benefit that is
payable to the Employee under any policy of disability insurance provided for
the Employee by the Company at its expense. The disability benefit shall be paid
for such period as is determined by the Board for the Company's senior
executives but shall not be less than the remainder of the scheduled term of
employment.
(c) Termination without Cause or with Good Reason. If (i) in
breach of this Agreement, the Company shall terminate the Employee's employment
other than (A) for Cause or (B) because of Disability or (ii) the Employee shall
terminate his employment for Good Reason; then:
(1) The Company shall pay the Employee his salary and
a pro rata portion of the bonus specified in Section 2(b) hereof (based upon the
bonus paid in respect of the preceding year) through the Termination Date and
all other unpaid and pro rata amounts to which the Employee is entitled as of
the Termination Date under any compensation plan or program of the Company,
including, without limitation, any incentive performance bonus and all accrued
vacation time;
(2) The Company shall pay as liquidated damages to
the Employee, and in lieu of any further salary payments hereunder for periods
after the Termination Date, the Employee's then current salary (payable in
installments in accordance with the Company's normal payroll practices) for the
remainder of the scheduled term of employment and the product of (A) the sum of
(i) the Employee's annual bonus specified in Section 2(b) hereof (based upon the
bonus paid in respect of the preceding year) and (ii) the maximum annual bonus
amount that could have been paid to the Employee under the Company's performance
incentive bonus plan for the year in which the Termination Date occurs, and (B)
the number of years (and any fraction of a year) remaining in the term of this
Agreement under Section 5 hereof as of the Termination Date, which amount shall
be payable in equal monthly installments during the remainder of the scheduled
term of employment;
(3) In addition to the liquidated amounts that are
payable to the Employee, the following shall apply: (A) the Employee shall
continue to participate in, and accrue benefits under, all retirement, pension,
profit sharing, employee stock ownership, thrift and other deferred compensation
plans of the Company for the remaining term of this Agreement as if the
termination of employment of the Employee had not occurred (with the Employee
being deemed to receive annually for the purposes of such plans the Employee's
then current salary and bonus (at the time of his termination) under Section
2(a) and (b) of this Agreement), except to the extent that such continued
participation and accrual is expressly prohibited by law or to the extent such
plan constitutes a "qualified plan" under Section 401 of the Internal Revenue
Code of 1986, as amended ("Code"), by the terms of the plan, in which case the
Company shall provide the Employee a substantially equivalent, unfunded,
non-qualified benefit; (B) the Employee shall be entitled to continue to receive
all other employee benefits and then existing fringe benefits referred to in
Section 4(a) and (b) hereof for the remaining term of this Agreement as if the
termination of employment had not occurred; and (C) all insurance or other
provisions for indemnification, defense or hold-harmless of officers or
directors of the Company that are in effect on the date the Notice of
Termination is sent to the Employee shall continue for the benefit of the
Employee with respect to all of his acts and omissions while an officer or
director as fully and completely as if such termination had not occurred, final
expiration or running of all periods of limitation against action which may be
applicable to such acts or omissions; and
(4) The liquidated amount and other benefits provided
for in this Section 8(c) shall not be reduced by any compensation or benefits
that the Employee may receive for other employment with another employer or
through self employment after termination of employment with the Company.
(d) Cost of Enforcement. In the event the employment of the
Employee is terminated by the Company because of Disability or without Cause, or
by the Employee for Good Reason, and the Company fails to make timely payment of
the amounts owed to the Employee under this Agreement, the Employee shall be
entitled to reimbursement for all reasonable costs, including attorney's fees,
incurred by the Employee in taking action to collect such amounts or otherwise
to enforce this Agreement, plus interest on such amounts at the rate of one
percent above the prime rate (defined as the base rate on corporate loans at
large U.S. money center commercial banks as published by The Wall Street
Journal), compounded monthly, for the period from the date of employment
termination until payment is made to the Employee. Such reimbursement and
interest shall be in addition to all rights to which the Employee is otherwise
entitled under this Agreement.
(e) Parachute Payment Limitation. If any payment or benefit to
the Employee under this Agreement would be considered a "parachute payment"
within the meaning of Section 280G(b)(2) of the Code and if, after reduction for
any applicable federal excise tax imposed by Section 4999 of the Code ("Excise
Tax") and federal income tax imposed by the Code the Employee's net proceeds of
the amounts payable and the benefits provided under this Agreement would be less
than the amount of the Employee's net proceeds resulting from the payment of the
Reduced Amount described below, after reduction for federal income taxes, then
the amount pay able and the benefits provided under this Agreement shall be
limited to the Reduced Amount. The "Reduced Amount" shall be the largest amount
that could be received by the Employee under this Agreement such that no amount
paid to the Employee under this Agreement and any other agreement, contract or
understanding heretofore or hereafter entered into between the Employee and the
Company ("Other Agreements") and any formal or informal plan or other
arrangement heretofore or hereafter adopted by the Company for the direct or
indirect provision of compensation to the Employee (including groups or classes
of participants or beneficiaries of which the Employee is a member) whether or
not such compensation is deferred, is in cash, or is in the form of a benefit to
or for the Employee ("Benefit Plan") would be subject to the Excise Tax. In the
event that the amount payable to the Employee shall be limited to the Reduced
Amount, then the Employee shall have the right, in the Employee's sole
discretion, to designate those payments or benefits under this Agreement, any
other Agreements, and/or any Benefit Plans, that should be reduced or eliminated
so as to avoid having the payment to the Employee under this Agreement be
subject to the Excise Tax.
9. Confidentiality. In consideration of the willingness of the
Company to employ the Employee and the compensation to bc paid and benefits to
be received therefore, any for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Employee agrees as
follows:
(a) The Company Owns All of the Employee's Work. All
improvements, discoveries, inventions, designs, documents, licenses and patents,
or other data devised, conceived, made, developed, obtained, filed, perfected,
acquired, or first reduced to practice, in whole or in part, or in the regular
course of employment by the Employee during the term of this Agreement, and
related in any way to the business, including development and research, of the
Company or any subsidiary or affiliate engaged in business substantially similar
to that of the Company shall be promptly disclosed to the Company. The Employee
hereby assigns and transfers to the Company all his right, interest and title
thereto, and such improvements, discoveries, inventions, designs, documents,
licenses and patents, or other data shall become the property of the Company.
During the term of this Agreement and at any time thereafter, upon request of
the Company, the Employee will join and render assistance in any proceedings and
execute any papers necessary to file and prosecute applications for, and to
acquire, maintain and enforce, letters patent, trademarks, registrations and/or
copyrights, both domestic and foreign, with respect to such improvements,
discoveries, inventions, designs, documents, licenses and patents, or other data
as required for vesting and maintaining title to same in the Company.
(b) Non-Disclosure of Confidential Information. The Employee
agrees and acknowledges that the term "Confidential and Proprietary Information"
shall mean any and all information not in the public domain, in any form,
emanating from or relating to the Company and its subsidiaries and affiliates,
including, but not limited to, trade secrets, technical information, costs,
designs, drawings, processes systems, methods of operation and procedures,
formulae, test data, know-how, improvements, price lists, financial data, code
books, invoices and other financial statements, computer programs, discs and
printouts, sketches, and plans (engineering, architectural or otherwise),
customer lists, telephone numbers, names, addresses, information about equipment
and processes (including specifications and operating manuals), or any other
compilation of information written or unwritten that is used in the business of
the Company or any subsidiary or affiliate that gives the Company or any
subsidiary or affiliate any opportunity to obtain an advantage over competitors
of tile Company who do not know or use such information. The Employee agrees and
acknowledges that all Confidential and Proprietary Information, in any form, and
all copies and extracts thereof, is and are and shall remain the sole and
exclusive property of the Company and, upon termination of his employment with
the Company, the Employee hereby agrees to return to the Company the originals
and all copies of any Confidential and Proprietary information provided to or
acquired by the Employee during the period of his employment. Except as ordered
by a court of competent jurisdiction, the Employee expressly agrees never to
disclose to any person (except to other Company employees, and then only On a
"need to know" basis) or entity any Confidential and Proprietary Information
either during the term of this Agreement or at any lime after termination of his
employment, except with the express written authorization and consent of the
Company.
(c) Customers' Information. The Employee understands and
acknowledges that each customer of the Company or its subsidiaries or affiliates
will disclose information that will be within the Company's control in
connection with the Company's furnishing of services to its customer. The
Employee covenants and agrees to hold such information in the strictest
confidence and shall treat such information in the same manner and be obligated
by tile provisions of this Agreement as if such information were Confidential
and Proprietary Information, as defined in Section 9(b) hereof.
10. Covenant Not to Compete. During the term of employment, the
employee shall not directly or indirectly own, manage, operate, control or be
employed by or participate in the ownership, management, operation or control of
any business which is of the type and character engaged in and competitive with
that of the Employer. The Employee shall not, during the term of this Agreement,
have any other paid employment other than with a subsidiary or affiliate of the
Company, except with the prior approval of the board; provided, however, that
the Employee shall be permitted to serve as a director on the boards of other
corporations.
11. Amendments or Additions; Action by Board. No amendments or
additions to this Agreement shall be binding unless in writing and signed by all
parties hereto. The prior approval by a majority affirmative vote of the full
Board shall be required in order for the Company to authorize any amendments or
additions to this Agreement, to give any consents or waivers of provisions of
this Agreement, or to take any other action under this Agreement including any
Notice of Termination.
12. Miscellaneous.
(a) Notices. Any notice required or permitted hereunder shall
be given in writing and shall be personally delivered or mailed by first class
registered or certified mail, postage prepaid, return-receipt-requested, or
transmitted by facsimile or reputable overnight courier, addressed to the
Company or the Employee at the addresses set forth on the signature page of this
Agreement, or at such other addresses as such party may designate by five
business days advance written notice to the other party.
Each notice or communication that shall have been
transmitted in the manner described above shall be deemed sufficiently served,
sent or received for all purposes at such time as it is sent to the addressee or
at such time as delivery is refused by the addressee upon presentation.
(b) Severability. Nothing in this Agreement shall be construed
so as to require the commission of any act contrary to law and wherever there is
any conflict between any provision of this Agreement and any law, statute,
ordinance, order or regulation, the latter shall prevail, but in such event any
necessary action will be taken to bring it within applicable legal requirements.
If any provision of this Agreement should be held invalid or unenforceable, the
remaining provisions shall be unaffected by such a holding.
(c) Complete Agreement. This Agreement contains the entire
Agreement and understanding between the parties relating to the subject matter
hereof, and supersedes any prior understandings, agreements or representations
by or between the parties, written or oral, relating to the subject matter
hereof.
(d) Successors and Assigns. This Agreement and the rights and
obligations of the parties hereto shall bind and inure to the benefit of any
successor or successors of the Company by way of reorganization, merger or
consolidation and any assignee of all or substantially all of its business and
assets, but except as to any such successor or assignee of the Company, neither
this Agreement nor any rights or benefits. hereunder may be assigned by the
Company or the Employee.
However, in the event of the death of the Employee, all rights to receive
payments hereunder shall become rights of the Employee's estate.
(e) Section Headings.The section headings used in this
Agreement are included solely for convenience and shall not affect, or be used
in connection with, the interpretation of this Agreement.
(f) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the day and year first above written,
Eastbrokers International Inc. Employee
00000 Xxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
/s/ Xxxxxx X. Xxxxxxxxxx /s/ Xxxxx X. XxXxxx
By: _________________________ ____________________
Authorized Officer Xxxxx X. XxXxxx
