EMPLOYMENT AGREEMENT
AGREEMENT made as of this 31st day of July, 1996, by and
between HH COMMUNICATIONS, INC., an Illinois corporation with its principal
office at 000 Xxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxx 00000 ("HH"), XXXXX
XXXXXX, residing at 000 Xxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxx 00000 (the
"Executive") and GLASGAL COMMUNICATIONS, INC., a Delaware corporation with its
principal office at 000 Xxxxxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 ("Glasgal").
W I T N E S S E T H :
WHEREAS, Glasgal became the owner of 1,000 shares of Common
Stock of HH representing 100% of the issued and outstanding capital stock of HH
pursuant to a Stock Purchase Agreement relating to such purchase dated as of
July 31, 1996 (the "Stock Purchase Agreement");
WHEREAS, prior to the acquisition by Glasgal of such shares of
Common Stock of HH, the Executive, together with the other Sellers (as defined
in the Stock Purchase Agreement) owned 100% of the issued and outstanding shares
of the capital stock of HH;
WHEREAS, HH and the Executive have agreed to modify and
formally document their existing long-term employment relationship for their
mutual benefit and are desirous of setting out the terms and conditions hereof;
NOW, THEREFORE, in consideration of the covenants and
agreements contained in this Agreement and other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged by each of the
parties), the parties covenant and agree as follows:
1. EMPLOYMENT OF EXECUTIVE. HH hereby employs Executive as its
Vice President, to perform, in accordance with the By-laws of HH, the duties and
responsibilities incident to such offices, subject at all times to the control
and direction of the Board of Directors of HH (the "Board of Directors").
2. ACCEPTANCE OF EMPLOYMENT; TIME AND ATTENTION. Executive
hereby accepts such employment and agrees that throughout the Term (as
hereinafter defined), he will devote his full time, attention, knowledge and
skills, faithfully, diligently and to the best of his ability, in furtherance of
the business of HH to perform the duties and responsibilities assigned to him
pursuant to Section 1 hereof. As Vice President, the Executive shall perform
such specific duties and shall exercise such specific authority related to the
management of the day-to-day operations of HH as may be assigned to the
Executive from time to time by the Board of Directors and which are reasonably
requested to be performed by the Executive as Vice President. The Executive
shall at all times be
subject to, observe and carry out such rules, regulations, policies, directions
and restrictions as HH shall from time to time establish.
3. TERM. Except as otherwise provided herein, the Executive's
employment hereunder shall commence as of the date hereof and shall terminate on
April 30, 1999 unless earlier terminated in accordance with Section 12 hereof
(the "Term").
4. COMPENSATION.
(a) As full compensation for his services HH shall pay to the
Executive a base salary at the rate of One Hundred Twenty Thousand ($120,000)
Dollars ("Base Salary") commencing as of the date hereof, for each year of his
employment. The Board of Directors shall review the Base Salary annually for
increases, but shall have no obligation to increase the Base Salary. Such
compensation shall be payable in equal monthly installments. All compensation
paid to Executive shall be subject to withholding and other employment taxes
imposed by applicable law.
(b) In addition, the Board of Directors of HH will consider
the payment of an annual bonus to Executive. Such bonus, together with bonus
payments made to other senior executive officers of HH, (i) is expected to be in
an amount not to exceed $240,000, (ii) will be made at the sole discretion of
the Board of Directors of HH, and (iii) is expected to be based on performance
criteria as reasonably determined by Executive and the Board of Directors of HH.
5. ADDITIONAL BENEFITS. (a) In addition to the compensation
set forth in Section 4 hereof, the Executive (and his family) shall be entitled
to participate in any benefits, including, without limitation, health insurance,
life insurance, retirement plans and executive thrift and stock option plans on
terms as favorable to those benefits generally available to the senior executive
officers of Glasgal that may be in effect from time to time during the Term. In
the alternative, the Executive may (at his option) choose to receive the same
level and type of benefits provided by HH on the date hereof. In such case, HH
shall continue to make available to the Executive, during the Term, all employee
benefits to which the Executive was entitled prior to the date hereof.
(b) Upon execution of this Employment Agreement, Glasgal shall
enter into an Option Agreement with Executive in the form attached hereof as
Annex A.
6. REIMBURSEMENT OF EXPENSES. HH shall reimburse the Executive
in accordance with its applicable policies for all expenses reasonably incurred
by Executive in connection with the
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performance of his duties hereunder and the business of HH, upon the submission
to HH appropriate receipts or vouchers.
7. VACATION. Executive shall be entitled to four (4) weeks
paid vacation in respect of each twelve (12) month period during the Term, such
vacation to be taken at times mutually agreeable to the Executive and the Board
of Directors. In the event that Executive requests vacation time and such
vacation request is denied by the Board of Directors, HH shall, at its option,
either (i) carry forward any unused vacation time into the next calendar year or
(ii) pay the Executive a pro rata portion of his Base Salary for any unused
vacation time.
8. RESTRICTIVE COVENANT. In consideration of HH's entering
into this Agreement, the Executive agrees that while the Executive is an
employee of HH and for a period of three (3) years thereafter, he will not:
(i) directly or indirectly own, manage, operate, join,
control, participate in, invest in, lend money to, guarantee the debts or
obligations of or otherwise be connected with, in any manner, whether as an
officer, director, employee, partner, investor or otherwise, any business entity
that is engaged in the business of designing, developing and marketing software
that functions substantially the same as software then marketed or developed by
HH at the time of termination of the Executive's employment hereunder;
(ii) for himself or on behalf of any other person,
partnership, corporation or entity, call on any customer of HH for the purpose
of soliciting, diverting or taking away any customer from HH;
(iii) induce, influence, or seek to induce or influence, any
person engaged as an employee, representative, agent, independent contractor or
otherwise by HH, to terminate his or her relationship with HH; or
(iv) at any time utilize for any commercial purpose a name
incorporating the words "HH Communications", or words or expressions likely to
be confused therewith, or which shall be likely to lead to confusion with the
business conducted by HH.
Nothing herein contained shall be deemed to prohibit the
Executive from investing his funds in securities of an issuer if the securities
of such issuer are listed for trading on a national securities exchange or are
traded in the over-the-counter market and the Executive's holdings therein
represent less than 5% of the total number of shares or principal amount of the
securities of such issuer outstanding.
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The Executive acknowledges that the provisions of this Section
8 are reasonable and necessary for the protection of HH, and that each
provision, and the period or periods of time, geographic areas and types and
scope of restrictions on the activities specified herein are, and are intended
to be, divisible. If any provision of this Section 8, including any sentence,
clause or part hereof, shall be deemed contrary to law or invalid or
unenforceable in any respect by a court of competent jurisdiction, the remaining
provisions shall not be affected, but shall, subject to the discretion of such
court, remain in full force and effect and any invalid and unenforceable
provisions shall be deemed, without further action on the part of the parties
hereto, modified, amended and limited to the extent necessary to render the same
valid and enforceable.
9. CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of HH, its parent and any of its affiliates
all information, knowledge and data relating to or concerned with HH, its parent
and any of its affiliate's operations, sales, business and affairs, and he shall
not, at any time, either during the Term or after the termination of the
Executive's employment with HH, use, disclose or divulge any such information,
knowledge or data to any person, firm or corporation (unless HH no longer treats
such information as confidential) other than to HH or its designees and
employees or except as may otherwise be required in connection with the business
and affairs of HH; PROVIDED, HOWEVER, that the Executive may disclose or divulge
such information, knowledge or data that is or becomes generally available to
the public through no wrongful act on the Executive's part or where such
disclosure is legally compelled by judicial or administrative action, provided
that the Executive agrees to give HH prompt notice of any such judicial or
administrative action to enable HH to seek an appropriate protective order.
10. INTELLECTUAL PROPERTY. Any idea, invention, design,
written material, manual, system, procedure, improvement, development or
discovery conceived, developed, created or made by the Executive alone or with
others relating to computer integration development tools during the Term and,
whether or not patentable or registrable, shall become the sole and exclusive
property of HH. The Executive shall disclose the same promptly and completely to
HH and shall, during the Term and at any time and from time to time hereafter
(i) execute all documents requested by HH for vesting in HH the entire right,
title and interest in and to the same, (ii) execute all documents requested by
HH for filing and prosecuting such applications for patents, trademarks, service
marks and/or copyrights as HH, in its sole discretion, may desire to prosecute,
and (iii) give HH all assistance it reasonably requires, including the giving of
testimony in any suit, action or proceeding, in order to obtain, maintain and
protect HH's right therein and thereto.
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11. EQUITABLE RELIEF. The parties hereto acknowledge that the
Executive's services are unique and that, in the event of a breach or a
threatened breach by the Executive of any of his obligations under this
Agreement, HH shall not have an adequate remedy at law. Accordingly, in the
event of any such breach or threatened breach by the Executive, HH shall be
entitled to such equitable and injunctive relief as may be available to restrain
the Executive and any business, firm, partnership, individual, corporation or
entity participating in such breach or threatened breach from the violation of
the provisions hereof. Nothing herein shall be construed as prohibiting HH from
pursuing any other remedies available at law or in equity for such breach or
threatened breach, including the recovery of damages and the immediate
termination of the employment of the Executive hereunder.
12. EARLY TERMINATION.
(a) The Term shall terminate without action on the part of HH
upon the death of the Executive. The Term shall also terminate upon 30 days
written notice by HH to the Executive, (i) in the event that the Executive shall
become "permanently incapacitated" (as hereinafter defined); or (ii) for "Cause"
(as hereinafter defined).
(b) For purposes of this Agreement, the Executive shall be
deemed permanently incapacitated in the event that the Executive shall, by
reason of his physical or mental disability, fail to substantially perform his
usual and regular duties for HH for a period of 120 consecutive days.
(c) For purposes of this Agreement, "Cause" shall mean any
criminal conviction of the Executive for an offense involving the
misappropriation of funds or material property of HH, or failure of the
Executive to devote his full time to his duties as Vice President of HH (other
than for reason of becoming permanently incapacitated), after written notice by
the Company providing Executive with an opportunity to cure such failure.
(d) In the event the Term is terminated by HH for Cause, HH
shall, within 30 days, pay to the Executive his Base Salary, as adjusted, to and
including the date of such termination, along with all expense reimbursements
due the Executive.
(e) In the event the Term is terminated due to the Executive
becoming permanently incapacitated, HH shall pay to the Executive the Base
Salary for the remainder of the Term, along with all expense reimbursement due
the Executive.
(f) In the event the Term is terminated by HH without Cause,
HH shall, within 30 days, pay to the Executive an amount equal to the total of
all payments of Base Salary for the remainder of the Term. In addition, the
Executive shall be entitled to the
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benefits provided pursuant to Section 5 hereof for the remainder of the Term.
Any and all stock options held by the Executive at the time of such termination
which are exercisable at the time of such termination shall be exercisable for a
period of ninety (90) days following the date of such termination pursuant to
the terms of such stock options, at which time all such options not previously
exercised shall expire. Any other stock options held by the Executive at the
time of such termination shall be forfeited.
13. ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Stock
Purchase Agreement and the Option Agreement attached hereto constitute the
entire agreement of the parties hereto, and any prior agreement between HH and
the Executive is hereby superseded and terminated effective immediately and
shall be without further force or effect. No amendment or modification shall be
valid or binding unless made in writing and signed by the party against whom
enforcement thereof is sought.
14. NOTICES. Any notice or other communication required or
permitted to be given by this Agreement shall be writing and shall be
effectively given if:
(a) delivered personally;
(b) sent by prepaid courier service;
(c) sent by registered mail; or
(d) sent by prepaid telecopier, telex or other similar
means of electronic communication and confirmed by
mailing the original document so sent by prepaid mail
on the same or following day,
in the case of notice to:
(i) Executive, to the address written on the first page
hereof,
(ii) HH, at
000 Xxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention:
Telecopier No. (000) 000-0000
(iii) Glasgal, at
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, X.X. 00000
Attention: Xxxxx Xxxx
Telecopier No. (000) 000-0000
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or at such other address as the party to whom such notice or other communication
is to be given shall have advised the party giving same in the manner provided
in this section. Any notice or other communication delivered personally or by
prepaid courier service shall be deemed to have been given and received on the
day it is so delivered at such address, provided that if such day is not a
business day such notice or other communication shall be deemed to have been
given and received on the next following business day. Any notice or other
communication sent by registered mail shall be deemed to have been given and
received on the third business day following the date of mailing. Any notice or
other communication transmitted by telecopier, telex or other similar form of
electronic communication shall be deemed given and received on the day of its
transmission provided that such day is a business day and such transmission is
completed before 5:00 p.m. on such day, failing which such notice or other
communication shall be deemed given and received on the first business day after
its transmission. Regardless of the foregoing, if there is a mail stoppage or
labor dispute or threatened labor dispute which has affected or could affect
normal mail delivery, then no notice or other communication may be delivered by
registered mail. If there has been a mail stoppage and if a party sends a notice
or other communication by telecopier, telex or other similar means of electronic
communication, such party shall be relieved from the obligation to mail the
original document in accordance with this section. "Business day" means any day
other than a Saturday, a Sunday or a statutory holiday observed in New York
City, New York.
15. NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement, nor
the right to receive any payments hereunder, may be assigned by the Executive.
This Agreement shall be binding upon the Executive, his heirs, executors and
administrators and upon HH and Glasgal, their respective successors and assigns.
16. WAIVERS. No course of dealing nor any delay on the part of
any party hereto in exercising any rights hereunder shall operate as a waiver of
any such rights. No waiver of any default or breach of this Agreement shall be
deemed a continuing waiver or a waiver of any other breach or default.
17. GOVERNING LAW. This Agreement shall be governed,
interpreted and construed in accordance with the laws of the State of New York,
except that body of law relating to choice of laws.
18. INVALIDITY. If any clause, paragraph, section or part of
this Agreement shall be held or declared to be void, invalid or illegal, for any
reason, by any court of competent jurisdiction, such provision shall be
ineffective but shall not in any way invalidate or affect any other clause,
paragraph, section or part of this Agreement.
19. FURTHER ASSURANCES. Each of the parties shall execute such
documents and take such other actions as may be reasonably requested by the
other party to carry out the provisions and purposes of this Agreement in
accordance with its terms.
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20. COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts which may be by facsimile, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
21. INDEMNIFICATION. HH shall indemnify the Executive, to the
fullest extent permitted by Delaware General Corporation Law, from and against
any loss, claim, liability and/or expense incurred for, or by reason of, or
arising out of, acts of the Executive as an officer and/or director of HH or any
affiliates of HH.
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IN WITNESS WHEREOF, the parties hereto have caused this
Employment Agreement to be duly executed as of the date first above written.
HH COMMUNICATIONS, INC.
By:/S/ XXXXXX X. XXXXXXX
-------------------------------------
Name: XXXXXX X. XXXXXXX
Title: PRESIDENT
/S/ Xxxxx Xxxxxx
----------------------------------------
Xxxxx Xxxxxx
GLASGAL COMMUNICATIONS, INC.
By:/S/ XXXXX X. XXXX
-------------------------------------
Name: XXXXX X. XXXX
Title: CHIEF EXECUTIVE OFFICER
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