EXHIBIT 10.5
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EMPLOYMENT AGREEMENT
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EMPLOYMENT AGREEMENT (the "Agreement") dated June 1, 2006 by and
between SWK Technologies, Inc. ("SWK" or the "Company"), a Delaware corporation
with an address at 0 Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000 (the "Company"), and
Xxxxxxxx Xxxxxx III, an individual having an office at 0000 Xxxxxxx Xxxx,
Xxxxxxxx, Xxx Xxxx 00000-0000 (the "Employee").
W I T N E S S E T H
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WHEREAS, the Company desires that Employee be employed by it and render
services to it, and Employee is willing to be so employed and to render such
services to the Company, all on the terms and subject to the conditions
contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration, the receipt
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT
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Subject to and upon the terms and conditions contained in this
Agreement, the Company hereby employs Employee, for the period set forth in
Paragraph 2 (subject to the terms and conditions of this Agreement), to render
the services to the Company, its affiliates and/or subsidiaries described in
Paragraph 3.
2. TERM
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Employee's term of employment under this Agreement shall commence on
June 1, 2006 (the "Commencement Date") and shall continue for a period
terminating on May 31, 2009 (the "Expiration Date"), unless earlier terminated
under the terms and conditions herein (the "Employment Term").
3. DUTIES
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(a) The Employee agrees that he will serve the Company on a
full-time basis faithfully and to the best of his ability as Director of
Customer Relationship Management (CRM) Services, subject to the general
supervision of the Chief Executive Officer of the Company. Employee shall be
based in the Company's offices in Syracuse, New York.
(b) The Employee's duties are subject to change, as determined
by the Chief Executive Officer and/or the Company's Board of Directors. The
Employee's primary areas of responsibility include, but are not limited to:
i) Selling, demonstrating, maintaining, project
managing and implementing Sales Logix CRM, ACT! and
Sage CRM software published by Sage Software, Inc.
("Sage"), and
ii) Selling, demonstrating, maintaining, project
managing and implementing Sage's Masterbuilder
Software, and
iii) Training end-user clients, SWK staff and others on
the above-mentioned software.
iv) Certain financial consulting engagements as approved
in advance by the Company's Chief Executive Officer
or its President.
(c) Employee agrees to abide by all By-Laws and policies of
the Company, as promulgated from time-to-time by the Company.
(d) As soon as possible, Employee will undertake to secure and
will maintain throughout the term of this Agreement all required Sage
certifications to enable Employee to sell, implement and train all software
mentioned in (b) above.
(e) Employee will serve as a member of the Company's
Management Committee or as otherwise directed by the Chief Executive Officer of
the Company.
4. EXCLUSIVE-SERVICES AND BEST EFFORTS
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Employee shall devote his entire working time, attention, best efforts
and ability exclusively to the service of the Company, its affiliates and
subsidiaries during the term of this Agreement. Deviations from this shall
require written approval by the Chief Executive Officer or the Company's Board
of Directors.
5. COMPENSATION
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(a) Base Salary. Commencing on the Commencement Date, and for
the next twelve (12) months following the Commencement Date, the Employee shall
receive an annual salary, payable bi-weekly, in the amount of One Hundred Ten
Thousand Dollars ($110,000), subject to all required federal, state and local
payroll deductions. The Employee's base salary shall be increased on each
anniversary of the Commencement Date as deemed appropriate by the Chief
Executive Officer with the approval of the Board of Directors of the Company. In
no instance shall the base salary be less than One Hundred Ten Thousand Dollars
($110,000). Notwithstanding anything to the contrary, the Employee shall be
notified of any revision in the Base Salary during the second and third year of
the Agreement no later than three months prior to the anticipated change in Base
Salary, subject to the restructuring of the current SWK executives' compensation
and employment agreements.
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(b) Commissions. During the first eighteen (18) months of this
Agreement, the Employee shall be paid 15% of net margin on all new Sage Sales
Logix, ACT! and Sage CRM deals (software only), provided that there is a minimum
of $200,000 in CRM annual software sales (measured and paid quarterly).
(c) Additional Compensation. Following the first anniversary
of the Commencement Date, the Employee may be paid an annual bonus at the sole
discretion of the Board of Directors of the Company.
(d) Stock Options. The Employee shall participate in the
Company's Incentive Stock Option Plan at the sole discretion of the Board of
Directors of the Company.
(e) Other Duties. In the event that the Company acquires
another company whose business causes the duties of the Director of CRM Services
to increase significantly (as determined solely by the Company's Board of
Directors) the Employee's salary will be adjusted upwards to reflect such
increased managerial duties.
6. BUSINESS EXPENSES
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Employee shall be reimbursed for only those business expenses incurred
by him (a) which are reasonable and necessary for Employee to perform his duties
under this Agreement in accordance with policies established from time-to-time
by the Company, and (b) for which Employee has submitted vouchers and/or
receipts. The Employee shall receive a monthly automobile allowance of five
hundred dollars ($500) and a monthly cellular phone allowance of one hundred
fifty dollars ($150).
7. EMPLOYEE BENEFITS, VACATIONS, PERSONAL DAYS
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During the term of this Agreement:
(a) The Employee shall participate in the Company's health insurance
program covering himself and his immediate family, subject to the rules and
regulations of the Company's current health-care provider and currently at no
cost to the Employee; this is subject to change. Alternatively, the Employee may
choose to keep his existing medical coverage, which premium for such coverage
shall be paid for by the Company which may not exceed the present premium
payments by the Company to Aetna for a comparable category of coverage, i.e.
individual, family, couple, etc.
(b) The Employee shall be eligible for the Company's group disability
program and $50,000 of term group life insurance coverage
(c) The Employee shall be entitled to four (4) weeks of vacation, sick
and/or personal days per annum during the Employment Term beginning on the
Commencement Date, to be planned and taken at such times as may be mutually
agreed upon by the Chief Executive Officer of the Company and the Employee. The
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Employee shall also be entitled to have off all published holidays of the
Company, as announced on December 31st of each year for the following calendar
year.
(d) The Employee shall be eligible for group dental benefits covering
all immediate family members; the Employee's premium reimbursement shall be at
35% of the monthly premium rate. This coverage is optional at the discretion of
the Employee.
(e) The Employee shall be eligible to participate in the SWK's 401(k)
plan, unless said plan is top-heavy (it currently is); otherwise, the Employee
shall participate in a discretionary, non-qualified deferred compensation plan,
which shall be funded based on available and free cash flow and at the
discretion of the Board of Directors.
8. DEATH AND DISABILITY
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(a) The Employment Term shall terminate on the date of
Employee's death, in which event Employee's base salary payable pursuant to
Paragraph 5 through the last day of the month in which the Employee's death did
occur shall be paid to his estate. Employee's estate will not be entitled to any
other compensation upon termination of this Agreement pursuant to this Paragraph
9(a).
(b) If during the Employment Term, Employee, because of
physical or mental illness or incapacity, shall become substantially unable to
perform the duties and services required of him under this Agreement for a
period of forty-five (45) consecutive days or ninety (90) days in the aggregate,
the Company may, upon at least ten (10) days' prior written notice given at any
time after the expiration of such 45 or 90-day period, as the case may be,
provide Employee with a written notice of its intention to terminate this
Agreement as of such date as may be set forth in the notice. In case of such
termination, Employee shall be entitled to receive his salary payable pursuant
to Paragraph 5, through the date of termination. Employee will not be entitled
to any other compensation upon termination of this Agreement pursuant to this
Paragraph 9(b).
9. TERMINATION
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(a) The Company may terminate the employment of Employee "FOR
CAUSE" during the Employment Term. Upon such termination, except as set forth
herein, the Company shall be released from any and all further obligations under
this Agreement, except that the Company shall be obligated to pay Employee the
unpaid prorated base salary pursuant to Paragraph 5 earned or accrued up through
the day on which Employee is terminated.
(b) As used herein, the term "FOR CAUSE" shall mean:
(i) any material breach of this Agreement by Employee
that, in the case of a breach that may be cured or remedied, is not cured or
remedied to the reasonable satisfaction of the Company within 30 days after
written notice is given by the Company to Employee, setting forth in reasonable
detail the nature of such breach;
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(ii) Employee's failure to perform his duties and services
hereunder to the reasonable satisfaction of the Chief Executive Officer or the
Board of Directors of the Company that, in the case of any such failure that may
be cured or remedied, is not cured or remedied to the reasonable satisfaction of
the Company within 30 days after notice is given by the Company to Employee,
setting forth in reasonable detail the nature of such failure;
(iii) any material act, or material failure to act, by
Employee in bad faith and to the material detriment of the Company; or
(iv) commission by Employee of a material act involving
moral turpitude, dishonesty, unethical business conduct, or any other conduct
which significantly impairs the reputation of the Company, its subsidiaries or
affiliates.
(v) the conviction of the Employee of a felony, including
the plea of nolo contendre.
10. DISCLOSURE OF INFORMATION AND RESTRICTIVE COVENANT
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(a) The Employee acknowledges that the Employee has been informed that
it is the policy of the Company to maintain as secret and confidential all
information
(i) relating to the products, processes, designs and/or systems used
by the Company and its Affiliates and
(ii) relating to the customers and employees of the Company and its
Affiliates. Confidential information and trade secrets include, but are not
limited to, customer and client lists, price lists, marketing and sales
strategies and procedures, operational and equipment techniques, business plans
and systems, quality control procedures and systems, special projects and
technological research, including projects, research and reports for any entity
or client or any project, research, report or the like concerning sales or
manufacturing or new technology, employee compensation plans and any other
information relating thereto, and any other records, files, drawings,
inventions, discoveries, applications or processes which are not in the public
domain (all the foregoing shall be referred to herein as the "Confidential
Information"). The Employee further acknowledges that such Confidential
Information is of great value to the Company.
For purposes of this Agreement, "Affiliates" means any person or entity
or group of persons or entities acting together that, directly or indirectly,
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the Company.
The parties recognize that the services to be performed by the Employee
are special and unique, and that by reason of his employment by the Company, the
Employee has and will acquire Confidential Information as stated above. The
parties confirm that it is reasonably necessary to protect the Company's (and
its Affiliates') goodwill, and accordingly the Employee does agree that the
Employee shall not and will not directly or indirectly (except where authorized
by the Board of Directors of the Company for the benefit of the Company or
agreed in writing by the Company and the Employee):
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A. At any time during his employment by the Company or after
the Employee ceases to be employed by the Company, divulge to any persons, firms
or corporations, other than the Company (hereinafter referred to collectively as
"third parties"), or use or allow or cause or authorize any third parties to
use, any such confidential information; and
B. At any time during his employment by the Company and for a
period of twenty four (24) months after the Employee ceases to be employed by
the Company, solicit or cause or authorize directly or indirectly to be
solicited, for or on behalf of the Employee or third parties, any business from
persons, firms, corporations or other entities who were at any time within two
(2) years prior to the cessation of his employment hereunder, customers of the
Company or its affiliates; and
C. At any time during his employment by the Company and for a
period of twenty four (24) months after the Employee ceases to be employed by
the Company, accept or cause or authorize directly or indirectly to be accepted,
for or on behalf of the Employee or third parties, any business from any such
customers of the Company or its affiliates; and
D. At any time during his employment by the Company and for a
period of twenty four (24) months after the Employee ceases to be employed by
the Company, solicit or cause or authorize directly or indirectly to be
solicited for employment, for or on behalf of the Employee or third parties, any
persons (excluding any individuals residing in the same immediate primary
residence as the Employee, and/or the Employee's immediate family) who were at
any time within one year prior to the cessation of his employment hereunder,
employees of the Company or its affiliates; and
E. At any time during his employment by the Company and for a
period of twenty four (24) months after the Employee ceases to be employed by
the Company, employ or cause or authorize directly or indirectly to be employed,
for or on behalf of the Employee or third parties, any such employees of the
Company or its affiliates.
F. Notwithstanding anything to the contrary, the Employee may
be employed or provide services solely as a certified public accountant that
would otherwise be restricted under this Paragraph 10.
(b) The Employee agrees that, upon the expiration of his employment by
the Company for any reason, the Employee shall forthwith deliver up to the
Company any and all records, drawings, notebooks, keys and other documents and
material, and copies thereof in his possession or under his control which is the
property of the Company or which relate to any confidential information or any
discoveries of the Company.
(c) The Employee agrees that any breach or threatened breach by the
Employee of any provision of Paragraphs 10 and 11 shall entitle the Company, in
addition to any other legal remedies available to it, to enjoin such breach or
threatened
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breach through any court of competent jurisdiction. The parties understand and
intend that each restriction agreed to by the Employee herein above shall be
construed as separable and divisible from every other restriction, and that the
unenforceability, in whole or in part, of any restriction will not affect the
enforceability of the remaining restrictions, and that one or more or all of
such restrictions may be enforced in whole or in part as the circumstances
warrant.
(d) For the purposes of this Section, the term "Company" shall mean and
include any and all subsidiaries, parents and affiliated corporations of the
Company in existence from time to time, for which the Company has operational
control.
(e) Employee will not induce or persuade other employees of the Company
to join him in any activity prohibited by Paragraph 10 or 11.
(f) This Paragraph 10 and Paragraphs 11, 12, 13, 14, 19 and 20 shall
survive the expiration or termination of the Agreement for any reason.
(g) It is expressly agreed by Employee that the nature and scope of
each of the provisions set forth in Paragraphs 10 and 11 are reasonable and
necessary. If, for any reason, any aspect of these provisions as they apply to
Employee is determined by a court of competent jurisdiction to be unreasonable
or unenforceable, the provisions shall only be modified to the minimum extent
required to make the provisions reasonable and/or enforceable, as the case may
be. Employee acknowledges and agrees that his services are of a unique character
and expressly grants to the Company or any subsidiary, successor or assignee of
the Company, the right to enforce the provisions above through the use of all
remedies available at law or in equity, including, but not limited to,
injunctive relief.
11. COMPANY PROPERTY
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(a) Any patents, inventions, discoveries, applications,
processes or designs, devised, planned, applied, created, discovered or invented
by Employee in the course of Employee's employment under this Agreement and
which pertain to any aspect of the Company's or its respective subsidiaries' or
affiliates' businesses shall be the sole and absolute property of the Company,
and Employee shall make prompt report thereof to the Company and promptly
execute any and all documents reasonably requested to assure the Company the
full and complete ownership thereof.
(b) All records, files, lists, including computer generated
lists, drawings, documents, equipment and similar items relating to the
Company's business which Employee shall prepare or receive from the Company
shall remain the Company's sole and exclusive property. Upon the expiration of
this Agreement, or, if earlier, upon demand by the Company, Employee shall
promptly return to the Company all property of the Company in his possession.
Employee further represents that he will not copy or cause to be copied, print
out or cause to be printed out any software, documents or other materials
originating with or belonging to the Company. Employee covenants that, upon
termination of his employment with the Company, he will not retain in his
possession any such software, documents or other materials.
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12. REMEDY
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It is mutually understood and agreed that Employee's services are
special, unique, unusual, extraordinary and of an intellectual character giving
them a peculiar value, the loss of which cannot be reasonably or adequately
compensated in damages in an action at law. Accordingly, in the event of any
breach of this Agreement by Employee, including, but not limited to, the breach
of the non-disclosure, non-solicitation and non-compete clauses under Paragraphs
10 and 11 hereof, the Company shall be entitled to equitable relief by way of
injunction or otherwise in addition to damages the Company may be entitled to
recover. Nothing herein shall be deemed to restrict any remedy available to
Employee for breach of the Agreement by the Company.
13. REPRESENTATIONS AND WARRANTIES OF EMPLOYEE AND THE COMPANY
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(a) In order to induce the Company to enter into this
Agreement, Employee hereby represents and warrants to the Company as follows:
(i) Employee has the legal capacity and unrestricted right to execute and
deliver this Agreement once to perform all of his obligations hereunder: (ii)
the execution and delivery of this Agreement by Employee and the performance of
his obligations hereunder will not violate or be in conflict with any fiduciary
or other duty, instrument, agreement, document, arrangement or other
understanding to which Employee is a party or by which he is or may be bound or
subject; and (iii) Employee is not a party to any instrument, agreement,
document, arrangement or other understanding with any person (other than the
Company) requiring or restricting the use or disclosure of any Confidential
Information or the provision of any employment, consulting or other services.
(b) The Company hereby represents and warrants to Employee, as
follows: (i) the execution, delivery, and performance of this Agreement has been
duly authorized by all necessary corporate action of the Company; and (ii) this
Agreement constitutes the valid and binding obligation of the Company,
enforceable in accordance with its terms, except that such enforcement may be
subject to any bankruptcy, insolvency, reorganization, fraudulent transfer or
other laws, now or hereafter in effect, relating to or limiting creditors'
rights generally.
14. NOTICES
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All notices given hereunder shall be in writing and shall be deemed
effective upon delivery or attempted delivery, if sent by registered or
certified mail, return receipt requested, or via overnight courier addressed to
Employee at his address set forth on the first page of this Agreement, or to the
Company at its address set forth on the first page of this Agreement, Attention:
Chief Executive Officer, with a copy to Meritz & Xxxxx LLP, 0000 X Xxxxxx, XX,
Xxxxxxxxxx, XX 00000, Attention: Xxxxxxxx X. Xxxxx, or at such address as such
party shall have designated by a notice given in accordance with this Paragraph
14.
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15. ENTIRE AGREEMENT
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This Agreement constitutes the entire understanding of the parties with
respect to its subject matter and no change, alteration or modification hereof
may be made except in writing signed by the parties hereto. Any prior or other
agreements, promises, negotiations or representations not expressly set forth in
this Agreement are of no force or effect.
16. SEVERABILITY
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If any provision of this Agreement shall be unenforceable under any
applicable law, then notwithstanding such unenforceability, the remainder of
this Agreement shall continue in full force and effect.
17. WAIVERS, MODIFICATIONS, ETC.
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No amendment, modification or waiver of any provision of this Agreement
shall be effective unless the same shall be in writing and signed by each of the
parties hereto, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
18. ASSIGNMENT
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Neither this Agreement, nor any of Employee's rights, powers, duties or
obligations hereunder, may be assigned by Employee. This Agreement shall be
binding upon and inure to the benefit of Employee and his heirs and legal
representatives and the Company and its successors and assigns. Successors of
the Company shall include, without limitation, any corporation or corporations
acquiring, directly or indirectly, all or substantially all of the assets of the
Company, whether by merger, consolidation, purchase, lease or otherwise, and
such successor shall thereafter be deemed "the Company" for the purpose hereof.
19. APPLICABLE LAW
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This Agreement shall be deemed to have been made, drafted, negotiated
and the transactions contemplated hereby consummated and fully performed in the
State of New Jersey and shall be governed by and construed in accordance with
the laws of the State of New Jersey, without regard to the conflicts of law
rules thereof. Nothing contained in this Agreement shall be construed so as to
require the commission of any act contrary to law, and whenever there is any
conflict between any provision of this Agreement and any statute, law,
ordinance, order or regulation, contrary to which the parties hereto have no
legal right to contract, the latter shall prevail, but in such event any
provision of this Agreement so affected shall be curtailed and limited only to
the extent necessary to bring it within the legal requirements.
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20. JURISDICTION AND VENUE
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It is hereby irrevocably agreed that all actions, suits or proceedings
between the Company and Employee arising out of, in connection with or relating
to this Agreement shall be exclusively heard and determined in, and the parties
do hereby irrevocably submit to the exclusive jurisdiction of the Essex County,
New Jersey trial court or the Federal District Court in the district in which
the Company's principal offices are located. The parties also agree that a final
judgment in any such action, suit or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. The parties hereby unconditionally waive any objection which
either of them may now or hereafter have to the venue of any such action, suit
or proceeding brought in any of the aforesaid courts, and waive any claim that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.
21. FULL UNDERSTANDING
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Employee represents and agrees that he fully understands his right to
discuss all aspects of this Agreement with his private attorney, that to the
extent, if any, that he desired, he availed himself of this right, that he has
carefully read and fully understands all of the provisions of this Agreement,
that he is competent to execute this Agreement. that his willingness to execute
this Agreement has not been obtained by any duress and that he freely and
voluntarily enters into it, and that he has read this document in its entirety
and fully understands the meaning, intent and consequences of this document
which is that it constitutes an agreement of employment.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
SWK TECHNOLOGIES, INC. XXXXXXXX XXXXXX III
By:___________________________ By:_________________________
Xxxxxxx X. Xxxx
President and Chief Executive Officer
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