Exhibit 10.5
EMPLOYMENT AGREEMENT
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THIS EMPLOYMENT AGREEMENT (the "Agreement") dated June 1, 1999, is entered
into by and between Xxxx Xxxxx (the "Employee") and Cyberfast Systems, Inc., a
Florida corporation ("CSI").
WHEREAS, CSI desires to employ the Employee on the terms set forth in this
agreement; and
WHEREAS, the Employee desires to serve CSI as an employee on the terms set forth
in this Agreement.
NOW, THEREFORE, in consideration of the promises, the mutual covenants
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. Employment. CSI hereby agrees to employ Employee on the terms and
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conditions set forth below commencing on the date of execution the "Effective
Date" and the Employee hereby accepts such employment on such date. Subject to
the terms and conditions set forth herein and unless sooner terminated as
hereinafter provided, CSI shall employ the Employee and the Employee agrees to
serve as an employee of CSI from the Effective Date to and including the third
anniversary of the Effective Date of this Agreement (the "Initial Term"). For
purposes of this Agreement, any extension of this Agreement beyond the Initial
Term shall be referred to as a "Renewal Term."
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2. Position. During the Initial Term, the Employee shall serve as Chief
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Technical Officer and shall perform all duties and services incident to such
positions and such other duties and services of an executive nature as may from
time to time be assigned to him by the Board of Directors of CSI (the "Board"),
including, without limitation, services as an officer or other executive of any
Affiliate (as defined in Section 9 below) of CSI. The Employee shall be subject
to the control and direction of the Board under mutually acceptable terms to
both parties. The Employee shall be indemnified to the extent permissible by
CSI's Articles of Incorporation, as amended, while holding such position(s)
through Errors and Omissions Insurance paid for by CSI. CSI shall use its best
efforts to cause the Employee to be elected to its Board.
3. Loyalty. The Employee agrees that during the Initial or any Renewal
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Term, he will devote his full time and attention during regular business hours
to the business and affairs of CSI and its affiliates (as defined herein) and
will not, without the prior permission of the Board, engage in any other
business enterprise which requires the regular business hours and attention of
the Employee. The foregoing shall not prevent (a) the purchase or ownership by
the Employee of investments or securities of any business which is not
competitive and does not have any business relations with CSI or any of its
Affiliates; and (b) the passive ownership of up to 10% of the issued capital
stock of any publicly traded company by itself, whether such company is a
competitor of CSI, or not; provided (the time or attention devoted to each of
such activities listed in subparagraphs (a) and (b) above does not materially
interfere with the performance of the Employee's duties hereunder. The Employee
further agrees that during the term, he will accept such directorships,
executive offices and committee memberships in CSI and
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its Affiliates to which he may from time to time be elected and will perform and
render the duties and the services incidental thereto.
4. Compensation. For the full, prompt and faithful performance of all of
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the duties and services to be performed by the Employee hereunder during the
Initial Term, CSI agrees to pay, and the Employee agrees to accept, the amounts
set forth below:
(a) Base Salary. As compensation for all services rendered by the
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Employee in performance of his duties or obligations under this Agreement, CSI
shall pay Employee an annual base salary of $100,000 (the "Base Salary"),
payable in equal semi-monthly installments.
(b) Signing Bonus. A signing bonus will be paid to Employee in the amount
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of 10,000 shares of restricted CSI stock, payable on the Effective Date of this
Agreement. Of the 10,000 shares of restricted stock, 5,000 shall be fully
vested and 5,000 shall vest six months from the Effective Date, as defined,
provided that the Employee is an employee of CSI as of the vesting date.
(c) Benefit Plans. In addition to receiving the Base Salary provided
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for in Section 4(a), the Employee shall be entitled during the Initial Term,
upon satisfaction of all eligibility requirements, if any, to participate in all
health, dental, disability, life insurance and other benefit programs, now or
hereafter established by CSI which is available to all of CSI's employees and
shall receive such other benefits as may be approved f
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(d) Vacation. The Employee shall be entitled to receive three weeks
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of paid vacation for each year during the Initial Term and shall be entitled to
receive paid holidays as enjoyed by all other employees of CSI.
(e) Expenses. CSI agrees upon tender of appropriate documentation to
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reimburse the Employee for all reasonable expenses incurred by him in providing
services under this Agreement in accordance with its policies and practices
regarding expense reimbursement then in effect.
(f.) Quarterly Bonus. Each fiscal quarter of the Initial Term of this
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Agreement, CSI shall pay the Employee a bonus equal to 3.3% of CSI's net pre-tax
income, calculated in accordance with generally accepted accounting principles
consistently applied. This quarterly bonus shall be paid on or before the
earlier of (i)the filing by CSI with the Securities and Exchange Commission of
its quarterly report on Form 10-QSB or Form 10-Q or (ii) 50 days after the end
of each fiscal quarter.
(g) Stock Option Grants. CSI grants to the Employee pursuant to CSI's
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1999 Stock Option Plan incentive stock options (the "Options") as defined by the
Internal Revenue Code of 1954, as amended, to purchase 300,000 shares of CSI
common stock exercisable over a 10 year period at $3.50 per share. The Options
shall vest in increments of 25,000 Options provided that the Employee is still
employed by CSI as of the last day of each fiscal quarter commencing on
September 30, 1999 and provided further that at the expiration of the Initial
Term, all unvested Options shall automatically vest, subject to the Employee
being employed on the last date of the Initial Term. During the period of
exercisability, the Options must be exercised within three months of termination
of employment or one year from the date of the Employee's death as
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required by the Internal Revenue Code. The number of shares of CSI common stock
shall be increased or decreased proportionally as a result of a forward or
reverse stock split.
5. Termination
(a) Death. In the event of the death of the Employee, this Agreement
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shall automatically terminate as of the date of death, and CSI's sole obligation
will be to pay to the Employee's estate all amounts accrued but unpaid under
this Agreement as of the date of death. In addition, CSI shall have in place
for the Employee's benefit, a term life insurance policy not to be less than
$500,000 in face value upon the death of the Employee. This policy shall be
funded entirely by CSI.
(b) Disability. In the event that the Employee shall because of physical or
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mental illness or incapacity, be unable to perform the duties and services to be
performed by him under this Agreement for a consecutive period of three months
or such shorter periods aggregating three months in any 12-month period
("Disability"), CSI shall not be obligated to pay to the Employee any
compensation of benefits beyond the date of Disability and may, in its sole
discretion, terminate this Agreement without any further obligation, provided,
however, that in the case of a termination of this Agreement by CSI on account
of Disability, CSI will be obligated to pay to the Employee all amounts accrued
but unpaid under this Agreement as of the date of Disability.
(c) Termination For Cause. CSI may terminate the Employee's
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employment agreement pursuant to the terms of this Agreement at any time for
cause by given written notice of termination. Such termination will become
effective upon the giving of such notice. Upon any termination for cause, the
Employee shall have no right to compensation, or reimbursement under
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Section 4 or to participate in any employee benefit programs for any period
subsequent to the effective date of termination. For purposes of this Section
5(a), "cause" shall mean: (i) the Employee is convicted of a felony or
misdemeanor or commits a criminal act; (ii) the Employee, in carrying out his
duties hereunder, has acted with ordinary negligence, gross negligence or
intentional misconduct resulting, in any case, in harm to CSI; (iii) the
Employee misappropriates CSI funds or otherwise defrauds CSI; (iv) the Employee
breaches his fiduciary duty to CSI resulting in profit to him, directly or
indirectly; (v) the Employee materially breaches any agreement with CSI, (vi)
the Employee breaches any provision of Sections 8, 9 or 10; (vii) the Employee
fails to competently perform his duties under Section 2; (viii) the Employee
fails to meet the goals which may be established by CSI's board of directors; or
(ix) the Employee suffers from alcoholism or drug addiction or otherwise uses
alcohol to excess or uses drugs in ally form except strictly in accordance with
the recommendation of a physician or dentist.
(d) Other Termination. In the event CSI terminates the Employee for
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reasons other than death, Disability or cause, CSI shall pay the Employee an
aggregate amount equal to the Employee's base salary for the remainder of
Initial Term or, if applicable, any subsequent Renewal Term. CSI shall pay such
amounts in 12 equal monthly installments beginning on the first day of the
calendar month immediately after the date of such termination and on the first
day of the next 11 calendar months thereafter. In addition, the Employee shall
be considered an employee for the purpose of vesting restricted stock or
options.
6. Voluntary Termination By Employee. The Employee may voluntarily
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terminate his employment hereunder for Good Reason (as defined below). Except
as provided in the preceding sentence, the Employee may not voluntarily
terminate his employment hereunder during the Initial Term.
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7. Termination For Good Reason. Termination by the Employee of his
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employment for "Good Reason" shall mean a termination by the Employee (i) upon a
significant demotion or material adverse change in his duties and
responsibilities; or (ii) a material breach or violation by CSI of any provision
of this Agreement after the Employee has given CSI at least 30 days prior
written notice together with an opportunity to cure said breach or violation
during such 30 day period. If the Employee terminates this Agreement in
accordance with Section 7 (i) or (ii) CSI shall pay the Employee an aggregate
amount equal to the Employee's Base Salary for the remainder of Initial Term or,
if applicable, any subsequent Renewal Term. CSI shall pay such amounts in 12
equal monthly installments beginning on the first day of the calendar month
immediately after the date of such termination and on the first day of the next
11 calendar months thereafter. In addition, the Employee shall be considered an
employee for the purpose of vesting restricted stock or options.
8. Non- Solicitation. The Employee agrees that during the Initial Term and
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for a period of 12 months after the termination of the Employee's employment
with CSI, he will not, directly or indirectly:
(i) Employ, hire, engage or be associated with any employee or other
person then, or during any pan of the preceding 12 months,
employed by or who performed consulting services for CSI or any
of its Subsidiaries,
(ii) Induce any person employed by or performing consulting services
for CSI or any of its subsidiaries to leave the employ of such
entity(ies); or
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(iii) Solicit the employment of any such person on her own behalf or
on behalf of any other business enterprise.
The provisions of this Section 8 shall survive the termination or expiration of
this Agreement for the 12-month period noted above.
9. Non-Competition. In consideration of CSI entering into this Agreement,
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the Employee agrees that from and after the Effective Date hereof and continuing
until termination of the Employee's employment with CSI for any reason
whatsoever (the "Restrictive Period"), the Employee shall not do any one or more
of the following, directly or indirectly.
(a) Anywhere in the United States, its territories, possessions, or
any other country in the world where CSI or any of its subsidiaries has sold
products or performed services within the period during which the Employee is
employed by CSI under this Agreement, engage or participate in, or assist,
advise or be connected with (including as an owner, partner, shareholder,
consultant, director, officer, employee or otherwise) any person, entity or
business enterprise involved in a business that is competitive with any business
of CSI or its subsidiaries; provided, however, that the ownership of up to 10%
of the issued capital stock of any publicly traded company by itself shall not
constitute a violation of' any provision of this Section 9; and
(b) solicit, attempt to solicit or aid in the solicitation of any
customer or known potential customer of CSI or any of its Subsidiaries during
the Restrictive Period, to purchase from any source other than CSI or any of its
subsidiaries any product or service which could be supplied or performed, as the
case may be, by CSI or any of its subsidiaries.
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10. Confidential Information. The Employee recognizes and acknowledges
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that various kinds of confidential and proprietary information and trade
secrets, including, but not limited to, CSI's and its subsidiaries' sales,
marketing and operating methods and lists of CSI's and its subsidiaries'
customers and vendors, as they may exist from time to time, are valuable,
special and unique assets of CSI's and its subsidiaries' respective businesses.
The Employee will not, during or after his employment, except in accordance with
his employment by CSI, disclose or cause or permit to be disclosed any
confidential or proprietary information or trade secrets of CSI or its
subsidiaries to any person, firm, corporation, association or other entity for
any reason or purpose whatsoever without the prior written consent of CSI or as
otherwise be required by law or legal process. The provisions of this Section
10 shall survive the termination and expiration of this Agreement for the 12-
month period. Confidential information shall not include any information
available to the public, or any information learned from a third party.
11. Remedies. In the event that the Employee shall violate any provision
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of Sections 8, 9 or 10 above, then the Employee hereby agrees that CSI shall be
entitled solely to a temporary or permanent injunction against him by any court
of competent jurisdiction prohibiting him from violating such provision. The
Employee further agrees (and he will not argue to the contrary) that CSI will
not have an adequate remedy at law in the event of any breach by Employee
hereunder and that CSI will suffer irreparable damage and injury if the Employee
breaches any of the provisions of Sections 8, 9 or 10 above. In such event, the
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Employee shall not request the Count to require CSI to post a bond. The
provisions of this section shall survive the termination or expiration of this
Agreement for the 12-month period.
12. Adherence To Inside Information Policies. The Employee acknowledges
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that CSI is publicly-held and, as a result, has and will continue to implement
inside information policies designed to preclude its employees and those of its
subsidiaries from violating the federal securities laws by trading on material,
non-public information or passing such information on to others in breach of any
duty owed to CSI of its subsidiaries. The Employee shall promptly execute any
agreement distributed by CSI to its employees requiring such employees to abide
by its inside information policies.
13. Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. The execution of this
Agreement may be by actual or facsimile signature.
14. Arbitration. Except for a claim of equitable relief, any controversy,
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dispute or claim arising out of or relating to this Agreement, or its
interpretation, application, implementation, breach or enforcement which the
parties are unable to resolve by mutual agreement, shall be settled by
submission by either party of the controversy, claim or dispute to binding
arbitration in Palm Beach County, Florida the parties agree in writing to a
different location, before three arbitrators in accordance with the rules of the
American Arbitration Association then in effect. In any such arbitration
proceeding, the parties agree to provide all discovery deemed necessary by the
arbitrators. The decision and award made by the arbitrators, shall be final,
binding and conclusive on all parties hereto for all purposes, and judgment may
be entered thereon in any court having jurisdiction thereof.
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15. Attorney's Fees. In the event that there is any controversy or claim
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arising out of or relating to this Agreement, or to the interpretation, breach
or enforcement thereof, and any action or proceeding is commenced to enforce the
provisions of this Agreement, the prevailing party shall be entitled to a
reasonable attorney's fee, costs and expenses.
16. Governing Law. This Agreement and any dispute, disagreement, or issue
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of construction or interpretation arising hereunder whether relating to its
execution, its validity, the obligations provided therein or performance shall
be governed or interpreted according to the internal laws of the State of
Florida without regard to choice of law considerations.
17. Entire Agreement. This Agreement constitutes the entire Agreement
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between the parties and supersedes all prior Oral and written agreements between
the parties hereto with respect to the subject matter hereof. Neither this
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, except by a statement in writing signed by the party or
parties, against which enforcement or the change, waiver discharge or
termination is sought.
18. Additional Documents. The parties hereto shall execute such
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additional instruments as may be reasonably required by their counsel in order
to carry out the purpose and intent of this Agreement and to fulfill the
obligations of the parties hereunder.
19. Section and Paragraph Headings. The section and paragraph headings in
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this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
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20. Notices and Addresses. All notices, offers, acceptance and any other
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acts under this Agreement (except payment) shall be in writing, and shall be
sufficiently given if delivered to the addressees in person, by Federal Express
or similar receipted delivery, by facsimile delivery or, if mailed, postage
prepaid, by certified mail, return receipt requested, as follows:
Xxxx Xxxxx
0000 XX 00/xx/ Xxxxxx
Xxxxx Xxxxxxx, XX 00000
CSI:
0000 Xxxxx Xxxxx
Xxxxxxxx Xxxxx, Xxxxxxx 33 487
with a copy to: Xxxxxxx D, Xxxxxx, Esq.
Xxxxxxx Xxxxxx, P.A.
0000 Xxxx Xxxxx Xxxxx Xxxx.
Xxxxx 000
Xxxx Xxxx Xxxxx, XX 00000
Facsimile (000) 000-0000
or to such other address as either of them, by notice to the other may designate
from time to time. The transmission confirmation receipt from the sender's
facsimile machine shall be conclusive
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evidence of successful facsimile delivery. Time shall be counted to, or from,
as the case may be, the delivery in person or by mailing.
21. Renewal Term. This agreement may be extended beyond the Initial Term
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outlined in Section 1. Any renewal must be mutually agreed upon by CSI and the
Employee in writing and duly executed.
22. Winding Up Of Current Employment. The Employee may by written notice
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to CSI defer the Effective Date in order to allow him to wind up his current
employment with adequate notice.
IN WITNESS WHEREOF, each of the parties bas executed this Agreement as of the
date first above written.
CYBERFAST SYSTEMS, INC.
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By: /s/ Xxxxxx Xxxxxxxxx June 6, 1999
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Xxxxxx Xxxxxxxxx, President
__________________________
By: /s/ Xxxx Xxxxx June 6, 1999
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Xxxx Xxxxx
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