EMPLOYMENT AGREEMENT
BETWEEN
U.S. TRANSPORTATION SYSTEMS, INC. &
XXXXXX X. XXXXX
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of July 10, 1996, by
and between U.S. Transportation Systems, Inc., a Nevada corporation, with
offices at 00 Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000 (the "Company"), and
Xxxxxx X. Xxxxx, residing 00 Xxxxx Xxxx, Xxxxxx, Xxxxxxxxxxx 00000 (the
"Employee"), who both agree as follows:
1. Employment Agreement
Upon the terms and subject to the conditions contained in this Agreement, the
Company hereby employs the Employee, and the Employee hereby accepts employment
by the Company.
2. Term of Employment
The term of the Employee's employment by the Company under this Agreement shall
be for five (5) years commencing on July 10, 1996 and ending July 9, 2001.
3. Services
The Employee shall be employed as the Treasurer and Controller of the Company,
and he shall perform such other services as may reasonably be assigned to him
from time to time by the Company. Employee shall devote his best efforts and his
full business and professional time to the faithful fulfillment of his duties
hereunder.
4. Compensation
The Employee shall receive an annual salary of $100,000.00 during the term of
this Agreement, payable in accordance with the Company's general policies for
payment of compensation to its salaried personnel. In addition, Employee shall
receive a non-accountable expense allowance of $25,000.00 per annum (payable
monthly), plus 12,500 registered shares, via stock grant, of the Company`s
common stock on the 30th day of November and the 31st day of March throughout
the term of this Agreement.
5. Fringe Benefits and Perquisites
The Employee shall be entitled to all fringe benefits and perquisites that may
be provided generally for the Company's most senior executive officers pursuant
to policies established from time to time by the Company's board of directors,
including but not limited to a cellular phone, regular vacations, and
participation in the Company family medical plan, pension plan, profit sharing
plan and stock option plan. Specifically not included is the providing of an
automobile which shall be at the sole responsibility and expense of the
Employee.
6. Reimbursements
The Employee shall be reimbursed weekly for all direct substantiated
out-of-pocket expenditures duly made by him on the Company's behalf in the
performance of his services under this Agreement, subject to timely reporting
requirements imposed from time to time by the Company's board of directors.
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7. Indemnification
Prior to the date hereof, Employee has been engaged in the operation of a
limousine business in the metropolitan area under the name of RPS Executive
Limousines Ltd. ("RPS"). Employee has incurred various and sundry liabilities,
contingent and otherwise, in connection with the operation of RPS and, as
further consideration for his covenant not to compete, the company agrees to
indemnify Employee from any liability, cost or expense (including attorney(s)
fees) incurred in connection with the following matters:
(a) Any Internal Revenue Service liability evolving from a federal ruling
to the effect that certain RPS drivers are deemed to be employees as opposed to
independent contractors.
(b) Any similar ruling by the New York State Department of Unemployment to
the effect that certain drivers are deemed to be employees.
(c) Any ruling by the State of New York resulting in a Workers'
Compensation premium deficiency.
(d) Any attempt by either of Xxxx Xxxx Xxxxx or Xxx Xxxxxxxx to seek
collection from Employee of any RPS debt.
(e) The lease, purchase and/or financing by RPS of the twelve (12) motor
vehicles set forth on Schedule A which is hereby made a part hereof.
8. Covenant Not to Compete
Employee shall not engage in the operation or any limousine, van or bus company,
or a company involved in the transportation of
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passengers or property by motor vehicle any place in the New York metropolitan
area for a term equivalent to the period of his employment with the Company,
plus a period of Two (2) years following his termination of employment by the
Company, but in no event sooner than July 9, 2003 (Employee's Term). Employee
shall not, during Employee's Term, directly or indirectly (on his own behalf or
as an agent, employee, officer, director, partner, shareholder, or other owner),
loan money or credit to, own any interest in, engage in, or otherwise
participate in a business directly competitive with the Company's present
operations and business throughout the continental United States. Employee
acknowledges that his covenant not to compete is essential to this Agreement,
that the Company would not have entered into this Agreement without this section
being included in it, and that this section is reasonable and does not place any
undue hardship on Employee, and that Employee has been amply and generously
compensated for agreeing to the terms of this Covenant by a combination of cash,
stock and indemnification incentives over and above his base salary. Employee
acknowledges and agrees that the Company's remedy at law for any breach of his
obligations under this section would be inadequate, and agrees and consents that
temporary and permanent injunctive relief may be granted in any proceeding which
may be brought to enforce any provisions of this section without the necessity
of proof of actual damages. With respect to any such provisions finally
determined by a court of competent jurisdiction to be unenforceable, such court
shall have
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jurisdiction to reform this Agreement and such provision so that it is
enforceable to the maximum extent permitted by law, and the parties shall abide
by such court's determination. If such unenforceable provision cannot be
reformed, such provision shall be deemed to be severed from this Agreement, but
every other provision of this Agreement shall remain in full force and effect.
9. Non-Compete Consideration
For his covenant not to compete, which is an integral part of this
Agreement, the Company is paying Employee, or his designee, the following:
(a) $50,000.00 in cash, receipt of which is acknowledged, and a common
stock allotment of 50,000 shares which the Company undertakes to register and
deliver by August 31, 1996.
(b) The equivalent of $500,000.00 in the form of shares of its common stock
which the Company agrees to register by August 31, 1996. The value of said
shares shall be based upon the average price for the five (5) trading days
immediately preceding the delivery of the shares, subject to a discount of
Twenty Percent (20%) -- Example: Assuming an average 5-day price of $1.00 less a
discount of 20% = $0.80 divided into $500,000.00 = 625,000 shares. Employee
agrees to deliver all of the shares described in this section "(b)" to a
registered broker acceptable to the Company. Employee will advise said broker
that single week sales are limited to a maximum of 1/13 of the total shares
delivered on a non-cumulative basis. These sales should not be construed as an
obligation of employee to sell any minimum number of shares. Employee will also
instruct his broker to furnish simultaneous confirmation of each sales
transaction to the
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Company.
10. Termination of Employment
Both the Company and the Employee have the mutual option to terminate this
Agreement at any time upon the following terms and conditions:
(a) Termination by Employee: Employee shall not be entitled to any
severance pay and, Employee's obligations under paragraph 8 of this Agreement
remains in full force and effect.
(b) Termination by Company: Other than for cause as hereinafter defined,
Employee shall receive severance pay as follows: If termination occurs during
Year 1 -- $50,000.00; Year 2 -- $40,000.00; Year 3 -- $30,000.00; Year 4 --
$20,000.00; Year 5 -- $10,000.00.
Notwithstanding anything contained in this Agreement to the contrary, this
Agreement may be terminated by the Company (but such termination shall not
affect Employee's obligations under paragraph 8 of this Agreement) at any time
on or after the occurrence of any of the following events, except as otherwise
set forth in this Agreement:
(i) Disability
Employee is unable to perform his duties assigned to him under this
Agreement for more than sixty (60) calendar days as a result of his becoming
Disabled (defined hereinafter) during any one (1) year period. "Disabled" shall
mean the inability of the Employee for medical reasons certified by a physician
selected by the Company and reasonably satisfactory to the Employee, to
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substantially perform his duties hereunder. The Employee shall make himself
available for examination by such physician upon reasonable request.
(ii) Fraud
Employee is found guilty by a court of competent jurisdiction of fraud or
dishonesty in the performance of his duties under this Agreement.
(iii) Crime
Employee is convicted of a felony.
(iv) Death
Employee dies.
(v) For Cause
Employee fails, within a reasonable time after notice, to follow the good
faith instructions communicated to Employee in writing, of the Company's board
of directors or by the Company's president.
(vi) Substance Abuse
Employee is found intoxicated or under the influence of illegal drugs or
other similar substance while performing his duties under this Agreement.
Notwithstanding anything in this Agreement and this paragraph, any termination
of employment herein provided shall not be effective unless notice of such event
is given to the Employee as hereinafter provided and the Employee fails to
remedy the situation within thirty (30) days of such notice.
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11. Employee's Capacity
The Employee represents and warrants to the Company that he has the capacity and
right to enter into this Agreement and perform all his services hereunder
without any restriction whatsoever by any other agreement, other document, or
otherwise.
12. Company Authority
The Company hereby represents and warrants to the Employee that: (i) it has full
power and corporate authority to execute and deliver this Agreement and to
perform its obligations hereunder; (ii) such execution, delivery and performance
will not (and with the giving of notice or lapse of time or both would not)
result in the breach of any agreements or other obligations to which it is a
party or otherwise bound; (iii) the execution and delivery of this Agreement is
not in violation of the Company's Certificate of Incorporation or Bylaws and
(iv) this Agreement is its legal, valid and binding obligation, enforceable in
accordance with its terms.
13. Severability
The intention of the parties to this Agreement is to comply fully with all laws
governing employment agreements, and this Agreement shall be construed
consistently with all such laws to the extent possible. If and to the extent
that any court of competent jurisdiction is unable to so construe part or all of
any provisions of this Agreement, and holds that part or all of that provision
to be invalid, such invalidity shall not affect the balance of the provision or
the remaining provisions of this Agreement which shall remain in full force and
effect.
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14. Complete Agreement
This document contains the entire agreement between the parties and supersedes
any prior decisions, negotiations, representations, or agreements between them
respecting employment of the Employee. No alterations, additions, or other
changes to this Agreement shall be binding unless made in writing and signed by
both parties to this Agreement.
15. Notices
Any notice or other communication required or desired to be given to any party
under this Agreement shall be in writing and shall be deemed given when (a)
delivered personally to that party; or (b) three (3) business days after being
deposited in the United States mail by Certified Mail Return Receipt Requested,
postage prepaid, at the address of such party set forth at the beginning of this
Agreement, or any other address hereafter designated by that party.
16. Non-Waiver
No failure by either party to insist upon strict compliance with any term of
this Agreement, to exercise any option, enforce any right, or seek any remedy
upon default of the other party shall affect, or constitute a waiver of, the
first party's right to insist upon such strict compliance, exercise that option,
enforce that right, or seek that remedy with respect to that default or any
prior, contemporaneous, or subsequent default; nor shall any custom or practice
of the parties at variance with any provision of this Agreement affect, or
constitute a waiver of either party's right to demand strict compliance with all
provisions of this Agreement.
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17. Governing Law
This Agreement has been executed in the State of New York, and the Company has
its executive offices in the State of New York. All questions concerning the
validity or intention of this Agreement and all questions relating to
performance hereunder shall be resolved under the laws of the State of New York
and employee consents to jurisdiction in the Supreme Court of the State of New
York.
18. Successors
This Agreement shall be binding upon, inure to the benefit of, and be
enforceable by and against the respective heirs, legal representatives,
successors, and assigns of each party to this Agreement, provided that this
Agreement shall be personal to the Employee, and the Employee shall not assign
any of his rights or obligations under this Agreement without the prior written
consent of the Company.
19. Headings
The headings contained herein are for the sole purpose of convenience of
reference, and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this Agreement.
20. Execution in Counterparts
This Agreement may be executed in one or more counterparts, each of
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which shall be deemed an original, but all of which together shall constitute
one and the same document.
COMPANY:
U.S. TRANSPORTATION SYSTEMS, INC.
By /s/ Xxxxxxx Xxxxxxxxx
-------------------------
Xxxxxxx Xxxxxxxxx, CEO
EMPLOYEE:
/s/ Xxxxxx X. Xxxxx
----------------------------
Xxxxxx X. Xxxxx
RPS EXECUTIVE LIMOUSINES LTD.
VEHICLE SCHEDULE (ALL LEASED)
JULY 1, 1996
RPS CAR # YEAR MAKE/MODEL SERIAL #
--------- ---- ---------- --------
11 1992 LINC. TOWN CAR 0XXXX00X0XX000000
16 1994 LINC. TOWN CAR 0XXXX00X0XX000000
17 1994 LINC. TOWN CAR 0XXXX00X0XX000000
42 1992 LINC. TOWN CAR 0XXXX00XXXX000000
54 1994 LINC. TOWN CAR 1LNLM81W2RY4764364
70 1992 LINC. TOWN CAR 0XXXX00X0XX000000
77 1992 LINC. TOWN CAR 0XXXX00X0XX000000
126 1994 LINC. LIMOUSINE 1LNLM81WRY665518
225 1995 MERC. GRAND MARQUIS 0XXXX00X0XX000000
340 1994 LINC. TOWN CAR 0XXXX00XXXX000000
504 1991 LINC. TOWN CAR 0XXXX00X0XX000000
817 1995 LINC. LIMOUSINE 1LNLM81WOSY652992
(8 PSGR)
SCHEDULE A
