EXHIBIT 10.3
SECOND AMENDED EMPLOYMENT AGREEMENT BETWEEN
SMARTPROS LTD.
AND
XXXXXXX X. XXXXXXXX
This amended employment agreement (the "Agreement") dated as of April 1, 2003 is
by and between SmartPros Ltd., a Delaware corporation (the "Company"), and
Xxxxxxx X. Xxxxxxxx, an individual residing at 000 Xxxxxx Xxxx, Xxxxxxxxx, Xxx
Xxxx 00000 (the "Executive").
1. EMPLOYMENT. The Company shall employ the Executive, and the Executive
agrees to serve the Company, on the terms and conditions set forth herein.
The Executive shall serve as President of the Company and shall be based
at the Company's headquarters in Hawthorne, New York. The Executive hereby
accepts such employment hereunder, except for absences occasioned by
illness and reasonable vacation periods, and agrees to undertake the
duties and responsibilities inherent in such position and such other
duties and responsibilities as the Company shall from time to time
reasonably assign to him. The Executive shall report to and be supervised
by the Board of Directors of the Company (the "Board") and the Chief
Executive Officer of the Company. The Executive shall use his best
efforts, including the highest standards of professional competence and
integrity, and shall devote his full business time and effort to the
performance of his duties hereunder. The Executive shall not engage in any
other business activity except that the Executive may engage from time to
time in such personal investment activities as do not interfere with his
day to day responsibilities to the Company. The Executive shall be allowed
to serve as an independent member of the boards of directors of other
companies with the prior approval of the Board.
2. COMPENSATION AND BENEFITS.
2.1 SALARY. During the Term (as defined below) of this Agreement, the
Executive shall be paid a salary at the rate of $210,000 per annum
("the Base Salary"), payable as customarily paid by the Company.
During the Term of this Agreement, executive's base salary shall be
reviewed at least annually by the Board. The first such review will
be made no later than March 31, 2004 and thereafter the Base Salary
shall be reviewed on or before March 31st of each succeeding year.
The Board, in its sole discretion, may increase, but not decrease
the Base Salary.
2.2 BONUS. In addition to his Base Salary, the Executive may be entitled
to bonuses at times and in amounts determined in the discretion of
the Board. The
target bonus shall equal 50 % of Base Salary. The bonus will be
based 50% on Company performance and 50% on individual performance.
2.3 BENEFITS. The Executive shall be entitled to participate in all
employee benefit programs or plans maintained by the Company from
time to time on the same basis as other similarly situated executive
employees of the Company. If the Executive elects not to participate
in the Company's health, dental or life insurance plans the Company
will pay or reimburse (based on the cost to the company for a
husband and wife plan) the Executive for the direct premium cost of
Executive's participation in the another health and life insurance
plan. (Any increase in the Company's cost for their plan will
increase the amount of reimbursement.) The Company will pay or
reimburse the lease cost of the automobile currently leased by the
Executive and, upon expiration or termination of the lease, will
continue to provide the Executive with a suitable automobile for his
business or and personal use. The Company will pay or reimburse the
Executive for all repair, maintenance and insurance expenses of the
automobile currently leased by Executive or any replacement provided
by the Company hereunder including any excess mileage charges. The
Executive will be entitled to 4 weeks paid vacation per year. The
company will pay the premium for the $1,500,000 term life insurance
policy, currently in effect, that is to be used to repurchase stock,
until the earlier of the expiration of this contract or any change
in premium for the policy. In the event the premium is changed, the
Executive may substitute a policy as long as the premium for the
same amount of insurance is the same or less per year.
2.4 REIMBURSEMENT OF EXPENSES. The Company shall reimburse the Executive
in accordance with its general reimbursement policies for all
ordinary and necessary expenses incurred by the Executive on behalf
of the Company upon the presentation of appropriate supporting
documentation.
3. TERM; TERMINATION; RIGHTS UPON TERMINATION.
3.1 TERM. The Company agrees to employ the Executive, and the Executive
agrees to serve the Company for a period commencing on April 1, 2003
and continuing until March 31, 2006 (the "End Date") unless
otherwise amended or terminated pursuant to the terms hereof (the
"Term").
3.2 TERMINATION. The Company may at any time, terminate the employment
of the Executive under this Agreement for Cause (as defined below),
or without Cause, immediately and without any requirement of notice.
The rights and obligations of the parties upon any termination of
the Executive's employment shall be as set forth in Section 3.3. For
purposes of this Agreement the term "Cause" shall mean (i) any act
of dishonesty or gross and willful misconduct
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with respect to the Company, including without limitation, fraud or
theft, on the part of the Executive, (ii) conviction of the
Executive of a felony, or (iii) the Executive's failure to perform
his assigned duties hereunder after written notice and a 30 day
opportunity to cure.
3.3 RIGHTS UPON TERMINATION. In the event that:
(a) The employment of the Executive is terminated by the
Company without Cause or by the Executive upon any change by
the Company in Executives function, duties or
responsibilities, which change would cause Executive's
position with the Company to become one of lesser
responsibility, importance or scope from the position
described in Section 1, then, for the remainder of the then
current Term of employment hereunder, (i) the Company shall
pay to the Executive, at the time otherwise due under Section
2, all Base Salary at the rate in effect at the time of
termination, (ii) a bonus equal to the highest annual bonus
received by the Executive in the last five years multiplied by
the amount of whole and partial years remaining on the
contract and (iii) the Company shall provide to the Executive
all benefits described in Section 2.3. The obligations of the
Company pursuant to this Section 3.3(a) shall be in lieu of
any other rights of the Executive hereunder to compensation or
benefits in respect of any period before or after the date of
such termination.
(b) The Executive's employment terminates by reason of death
or disability, then the Company shall pay and provide to the
Executive or Executive's estate or other successor in interest
at the time otherwise due under Section 2 all Base Salary and
benefits due to the Executive under Section 2 through the end
of the sixth month after the month in which the termination
occurs, but reduced in the case of disability by any payments
received under any disability plan, program or policy paid for
by the Company. The obligations of the Company pursuant to
this Section 3.3(b) shall be in lieu of any other rights of
the Executive hereunder to compensation or benefits in respect
of any period before or after the date of such termination and
in lieu of any severance payment, and no other compensation of
any kind or any other amounts shall be due to the Executive by
the Company under this Agreement. For purposes of this
Agreement, the term "disability" shall mean the Executive's
failure to perform the services contemplated by this Agreement
as a result of his physical or mental illness or incapacity
for a period of 6 consecutive months, or a total of 240 days
in any 365 day period.
(c) The employment of the Executive is terminated by the
Company for Cause, or by the Executive other than under
circumstances described in Section 3.3(a) or (b) above, the
Executive shall not be
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entitled to compensation or benefits granted hereunder beyond
the date of the termination of the Executive's employment.
(d) If the Company fails to offer to continue the employment
of the Executive in the capacity of its President for a period
of three years after the End Date at a Base Salary equal to
the higher of (i) $243,000.00 or (ii) 105% of the Base Salary
in effect on the End Date (the "Final Base Salary"), pursuant
to a written Agreement (the "Renewal Agreement") on terms and
conditions substantially identical to this Agreement, then, in
such event, the Company shall pay to the Executive in one lump
sum an amount equal to 50% of the Final Base Salary. Such
payment shall be made to the Executive within 10 days after
the End Date.
(e) If a Change in Control, as defined in Section 7, shall
occur at any time after March 31, 2005 then upon the
occurrence of such Change in Control the End Date shall be
amended to the date, which is one year after the date of such
occurrence.
4. PROPRIETARY INFORMATION.
4.1 The Executive agrees that all information and know how, whether or
not in writing, of a private, secret or confidential nature
concerning the business or financial affairs of the Company and its
subsidiaries (collectively, for purposes of this Section 4, the
"Company") and not within Executive's possession or knowledge prior
to his employment with the Company (collectively, "Proprietary
Information"), is and shall be the exclusive property of the
Company. By way of illustration, but not limitation, Proprietary
Information may include inventions, products, processes, methods,
techniques, projects, developments, plans, research data, financial
data, and personnel data. The Executive will not disclose any
Proprietary Information to others outside of the Company or use the
same for any unauthorized purposes without the written consent of
the Company, either during or after his employment, unless and until
such Proprietary Information has become public knowledge without
fault of the Executive.
4.2 The Executive agrees that all files, letters, memoranda, reports,
records, data, sketches, drawings, or other written, photographic,
or other tangible material containing Proprietary Information,
whether created by the Executive or others, which shall come into
his custody or possession, shall be and are the exclusive property
of the Company to be used by the Executive only in the performance
of his duties for the Company.
4.3 The Executive agrees that his obligation not to disclose or use
Proprietary Information and records of the type set forth herein
also extends to such types of Proprietary Information, records and
tangible property of other third parties
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who may have disclosed or entrusted the same to the Company or to
the Executive in the course of the Company's business.
5. OTHER AGREEMENTS. The Executive hereby represents that his performance of
all the terms of this Agreement and as an employee of the Company does not
and will not breach any agreement to keep in confidence proprietary
information, knowledge or data acquired by him in confidence or in trust
prior to his employment with the Company.
6. NON-COMPETITION, NON-SOLICITATION.
6.1 NON-SOLICITATION OF EMPLOYEES AND CUSTOMERS. The Executive agrees
that during the Term of the Executive's employment with the Company
and for a period of one year thereafter, the Executive shall not
directly or indirectly (i) recruit, solicit or otherwise induce or
attempt to induce any employees of the Company or any of its
subsidiaries to leave their employment or (ii) call upon, solicit,
divert or take away, or attempt to divert or take away, the business
or patronage of any customer licensee, vendor, collaborator or
corporate partner of the Company or any of its subsidiaries that had
a business relationship with the Company or any of its subsidiaries
at the time of termination of Executive's employment with the
Company and that did not have a business or personal relationship or
was known to Executive prior to his employment with the Company.
6.2 NON-COMPETITION. The Executive agrees that during the Term of the
Executive's employment with the Company, the Executive shall not
directly or indirectly, engage in competition with the Company or
any subsidiaries, or own or control any interest in, or act as
director, officer or employee of, or consultant to, any firm,
corporation or institution directly engaged in competition with the
Company or any of its subsidiaries; provided that the Company or one
of its subsidiaries is actively engaged in such business at the time
the Executive's employment by the Company is terminated; and
provided that the foregoing shall not prevent the Executive from
holding shares as a passive investor in a publicly held company
which do not constitute more than 5% of the outstanding shares of
such company. In the event that the Executive (i) voluntarily
terminates his employment, (including at any time on or after the
End Date) other than as provided for in this agreement, or (ii) is
terminated by the Company for Cause, the Executive agrees to not
compete in the E-Learning marketplace until the earlier of March 31,
2007 or one year from the date of such termination.
7. CHANGE IN CONTROL PROTECTION. For purposes of this Agreement, a " Change
in Control" of the Company shall mean 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
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promulgated under the Securities Exchange Act of 1934, as amended, or any
similar item, schedule or form, whether or not the Company is then subject
to such reporting requirement.
8. MISCELLANEOUS.
8.1 NOTICES. All notices required or permitted under this Agreement
shall be in writing and shall be deemed effective upon personal delivery
or upon deposit in the United States Post Office, by registered or
certified mail, postage prepaid, addressed if to the Executive, at the
address shown above and if to the Company, at its principal place of
business at 00 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxx, or at such other
address or addresses as either party shall designate to the other in
accordance with this Section 8.1.
8.2 PRONOUNS. Wherever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular forms of nouns and pronouns shall include
the plural, and vice versa.
8.3 ENTIRE AGREEMENTS. This Agreement constitutes the entire agreement
between the parties and supercedes all prior agreements and
understandings, whether written or oral, relating to the subject matter of
this Agreement.
8.4 AMENDMENT. This Agreement may be amended or modified only by a
written instrument executed by both the Company and the Executive.
8.5 GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of New York.
8.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the Company
may be merged or which may succeed to its assets or business, provided,
however, that the obligations of the Executive are personal and shall not
be assigned by him.
8.7 WAIVERS. No delay or omission by the Company in exercising any right
under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by the Company on any one occasion shall be
effective only in this instance and shall not be construed as a bar or
waiver of any right on any other occasion.
8.8 CAPTIONS. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.
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8.9 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
8.10 SPECIFIC ENFORCEMENT. The parties acknowledge that the Executive's
breach of the provisions of Section 4 and 6 of this Agreement will cause
irreparable harm to the Company. It is agreed and acknowledged that the
remedy of damages will not be adequate for the enforcement of such
provisions and that such provisions may be enforced by equitable relief,
including injunctive relief, which relief shall be cumulative and in
addition to any other relief to which the Company may be entitled.
9. ARBITRATION. Any claims, controversies, demands, disputes or differences
between or among the parties hereto or any persons bound hereby arising out of,
or by virtue of, or in connection with, or otherwise relating to this Agreement
shall be submitted to and settled by arbitration conducted in New York, New York
before one or three arbitrators each of which shall be knowledgeable in
employment law. Such arbitration shall otherwise be conducted in accordance with
the rules then obtaining of the American Arbitration Association. The parties
hereto agree to share equally the responsibility for all fees of the
arbitrators, abide by any decision rendered as final and binding, and waive the
right to appeal the decision or otherwise submit the dispute to a court of law
for a jury or non-jury trial. The parties hereto specifically agree that neither
party may appeal or subject the award or decision of any such arbitrator(s) to
appeal or review in any court of law or in equity or by any other tribunal,
arbitration system or otherwise. Judgment upon any award granted by such an
arbitrator(s) may be enforced in any court having jurisdiction thereof. If the
arbitration decision holds that the Company is at fault, the Executive shall be
entitled to reimbursement of fees and expenses from the Company in an amount not
to exceed $50,000. If the arbitration decision holds that the Company is not at
fault, the Company shall be entitled to reimbursement of fees and expenses from
the Executive in an amount not to exceed $25,000.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year set forth above
SmartPros Ltd.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: XXXXX X. XXXXXX
Title: CHIEF EXECUTIVE OFFICER
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------
XXXXXXX X. XXXXXXXX
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