EMPLOYMENT AGREEMENT
AGREEMENT, effective as of July 1, 1996 (the "Agreement"), between
INFINITE MACHINES CORP., a Delaware corporation, having an office at 000 Xxxxx
Xxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxx Xxxxxx 00000 (the "Company"), and XXXXXXXX X.
XXXXXXXXX, residing at 000 Xxxx Xxxxx Xxxx, Xxxxxxxxxxx, Xxxxx Xxxxxx 00000 (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive to devote full time
to the business of the Company, which includes various businesses carried on by
HGG Laser-Fare, Inc., a Rhode Island corporation ("Subsidiary"), and the
Executive desires to be so employed hereunder effective as of the date hereof.
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
1. EMPLOYMENT
1.1. The Company hereby agrees to employ the Executive, and
the Executive hereby agrees to serve, as President and Chief Operating Officer
of the Company, and as President and Chief Executive Officer of Subsidiary upon
the terms and conditions herein contained. The Executive shall be the most
senior executive officer of Subsidiary. In his capacity as an officer, subject
to the joint direction of the Chairman and Board of Directors of the Company and
the direction of the Board of Directors of Subsidiary in exercising their
fiduciary duties, the Executive shall have the executive power and authority to
carry out the business plans and
policies of the Company and Subsidiary and make decisions in connection
therewith and to designate other officers for election by such Boards of
Directors in the exercise of their fiduciary duties. The Executive shall report
to the Chairman and Board of Directors of the Company, jointly, and to the Board
of Directors of Subsidiary on a regular basis.
1.2. The term of employment under this Agreement shall
commence as of the date hereof (the "Effective Date"), and, subject to the terms
hereof, shall terminate on the earlier of (i) June 30, 2000 (the "Termination
Date"), or (ii) termination of the Executive's employment pursuant to this
Agreement (such term of employment referred to hereinafter as the "Employment
Term"); provided, however, that on the Termination Date and on each subsequent
anniversary of such Termination Date, the Termination Date shall be extended for
a period of one year, unless either party shall have given written notice to the
other party not less than six months prior to any such date that the Termination
Date shall not be so extended.
1.3. Throughout the Employment Term, the Executive shall
devote his best efforts and substantially all his business time and services to
the business and affairs of the Company and Subsidiary.
1.4. This Agreement shall not be interpreted to prohibit the
Executive from making passive personal investments or conducting private
business affairs if those activities do not
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materially interfere with the services required under this Agreement.
1.5 The Company shall take such action as a shareholder of
Subsidiary necessary to carry out the terms of the Agreement with respect to
Subsidiary.
2. SALARY
2.1. From the Effective Date, subject to the provisions of
Section 2.8, the Executive shall be entitled to receive a base salary at a rate
of not less than $175,000 for each year, payable in arrears in equal
installments not less frequently than monthly in accordance with the Company's
payroll practices, with such increases as are hereinafter provided. Once
increased, such higher amount shall constitute the Executive's annual base
salary.
2.2. The Company shall increase the Executive's annual base
salary on each July 1 after the Effective Date which occurs during the
Employment Term so that the Executive will remain the most highly compensated
employee of the Company or Subsidiary or any other wholly-owned subsidiary of
the Company.
2.3. In addition to any increases under Section 2.2, the
Company at any time may increase the Executive's base salary.
2.4. The Company shall pay the Executive a bonus of $75,000 on
or before December 31, 1997 on account of services performed during the calendar
year 1996.
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3. BONUSES
3.1. The Executive shall participate in all executive bonus
plans now existing and established from time to time by the Company or
Subsidiary, including the Company's Executive Incentive Performance Plan. The
Company may grant bonuses to the Executive in such amounts and at such times as
the Board of Directors shall determine. In no event shall bonuses be less than
proportionately comparable bonuses granted to other senior executives of the
Company, Subsidiary or any other wholly-owned subsidiary.
4. EMPLOYEE BENEFITS
4.1. The Executive shall be included to the extent eligible
thereunder under any and all existing and future plans, programs or arrangements
providing benefits for senior executives of the Company, Subsidiary or any other
wholly-owned subsidiary of the Company on terms no less favorable than those
available for other senior executives and at least comparable to those
maintained by the Company and/or Subsidiary as of the date hereof.
4.2. The Executive shall be included in all incentive, profit
sharing, bonus, or other similar or comparable plans applicable to senior
executives of the Company, Subsidiary and/or other wholly-owned subsidiaries
(including, without limitation, the Company's Executive Performance Incentive
Plan) in accordance with the terms thereof.
4.3. The Executive shall be provided with an automobile and
shall be entitled to all other perquisites or
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privileges of office which are made available to other senior executives of the
Company and/or Subsidiary during the Employment Term.
4.4. The Executive shall be provided, at the expense of the
Company, a level of disability and life insurance, the terms, conditions and
amounts of which are no less favorable to the Executive than those in effect on
the Effective Date or as the same may be increased for other senior executives
of the Company and/or Subsidiary.
4.5. The Executive shall be entitled to no less than 4 weeks
paid vacation in each year, which vacation shall be increased annually by one
additional week up to a maximum of six weeks. The Company may grant additional
vacation time to the Executive.
5. EXPENSES
5.1. The Executive is authorized to incur reasonable expenses
necessary to carry out his duties under this Agreement. The Company and
Subsidiary will reimburse the Executive for all such expenses upon presentation
by the Executive from time to time of an itemized account of such expenditures
in accordance with Company practices consistently applied.
6. TERMINATION
6.1. In the event that the Executive's employment is
terminated by the Company (other than as provided in Section 7, or for Cause, as
defined below) or the Executive terminates his employment for Good Reason (as
defined below) prior to the
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Termination Date, as then in effect, the Executive shall be entitled to receive,
in an immediate lump sum payment, the product of:
(i) The sum of (A) the Executive's highest annual rate
of salary, determined pursuant to Section 2 of this Agreement during the
Employment Term, and (B) the highest annual bonus paid to or accrued for the
benefit of the Executive during the Employment Term; multiplied by
(ii) 2.99.
6.2. In addition, the Company shall provide the Executive with a
continuation of those employee benefits,if any, designated with an asterisk on
Exhibit A (attached hereto) and the benefit provided under Section 4.4, or
substantially equivalent coverage (or the full value thereof in cash), for the
period from the end of the Employment Term until the Termination Date (as then
in effect); provided, however, that in the event that the Executive obtains
other substantially comparable employment during such period, the Executive
shall notify the Company and the amount of any health or medical benefits to
which the Executive is entitled under this Section 6.2 shall be reduced (but not
below zero) by any such benefits provided by the Executive's new employer. The
Executive shall also be entitled to receive a pro rata share of the maximum
award available under any incentive plan or program (including but not limited
to the Executive Performance Incentive Plan or any substitute, successor or
replacement thereto) for which the performance period has not closed (or, if
closed, payment has not been made) prior to the end of the Employment Term.
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7. DEATH OR PERMANENT DISABILITY
7.1. In the event the Executive shall fail during the
Employment Term, because of illness, physical or mental disability or other
incapacity, for a period of six consecutive months to render the services
provided for by this Agreement ("Permanent Disability"), then the Company may
terminate the Employment Term, by notice to the Executive effective not less
than 30 days after giving such notice which sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of the
Executive's employment under this Section 7.1; provided, however, that the
Company shall, after such termination due to Permanent Disability, continue to
pay the Executive's annual base salary (as set forth in Section 2 of this
Agreement) and provide for the continuation of the employee benefits designated
with an asterisk on Exhibit A and the benefit provided under Section 4.4 of this
Agreement or substantially equivalent coverage (or the full value thereof in
cash) for a period of 24 months. The Executive will use his reasonable best
efforts to cooperate with any physician engaged by the Company to determine
whether or not Permanent Disability exists. Any payments provided for in this
Section 7.1 shall be offset (but not below zero) by any salary continuation
payments received by the Executive under any plan, program or arrangements
described in Section 4.1 of this Agreement.
7.2. In the event of the death of the Executive during the
Employment Term, the Employment Term shall terminate on the date of the
Executive's death, and the Company shall pay or
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cause to be paid the amount of $750,000 to his estate (or other beneficiary
designated by him). Thereafter, the Company shall have no further obligation to
compensate the Executive under this Agreement. The Executive acknowledges that
the Company intends to fund such payment through a life insurance policy under
which the beneficiary will be designated by the Executive. Such life insurance
policy will be in addition to any other insurance benefit to which the Executive
may be entitled under this Agreement. The Executive agrees to cooperate with the
Company in obtaining such policy.
8. TERMINATION FOR GOOD REASON
8.1. The Executive may terminate his employment hereunder for
Good Reason at any time during the Employment Term. For purposes of this
Agreement, "Good Reason" shall mean any of the following (without the
Executive's express prior written consent):
(i) The assignment to the Executive by the Company of
duties inconsistent with the Executive's positions, duties, responsibilities,
titles or offices, or any removal of the Executive from or any failure to
re-elect the Executive to any of such positions, except in connection with the
termination of the Executive's employment for Cause, Permanent Disability as set
forth in Section 7, or as a result of the Executive's death or by the Executive
other than for Good Reason;
(ii) A reduction by the Company in the Executive's base
salary as in effect at the Effective Date hereof, as the same may be increased
according to the terms of this Agreement;
(iii) The Company's requiring the Executive to be based
anywhere other than the Company's executive offices in Rhode Island, except for
required travel on the Company's business to an extent substantially consistent
with the Executive's business travel obligations at the Effective Date hereof,
or any material reduction or adverse change in the emoluments or perquisites of
office provided to the Executive at the Effective Date hereof;
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(iv) A failure by the Company to continue in effect any
benefit or compensation plan (including any pension, profit sharing, bonus, life
insurance, health, accidental death or dismemberment or disability plan) in
which the Executive is participating at the Effective Date hereof (or in the
case of plans adopted after the date hereof and providing a type of benefit not
provided by the Company at the Effective Date hereof, at the respective dates of
adoption of such plans) without providing for or establishing plans or
arrangements providing the Executive with substantially similar benefits or the
taking of any action by the Company which would materially adversely affect the
Executive's participation in or materially reduce the Executive's benefits under
any of such plans;
(v) The taking of any action by the Company which would
deprive the Executive of any material fringe benefit enjoyed by the Executive
under this Agreement at the Effective Date (or in the case of a fringe benefit
not provided by the Company on the Effective Date, at the respective dates of
adoption of such plans first providing such fringe benefits) or the failure by
the Company to provide the Executive with the number of paid vacation days to
which the Executive is entitled hereunder or, if greater, in accordance with the
Company's practices at the Effective Date hereof;
(vi) The failure by the Company to obtain the specific
assumption of this Agreement by any successor or assign of the Company or any
person acquiring a substantial portion of the assets of the Company;
(vii) Any material breach by the Company of any
provision of this Agreement and, in the case of a breach, other than the failure
to pay base salary or bonuses when due, which is susceptible of cure without
material risk of permanent loss to the Executive, the continuation of such
breach for thirty (30) or more days following written notice to the Company; or
(viii) Subject to the provisions of Section 8.3, any
Change in Control (as defined below).
8.2 Change in Control.
For purposes of this Agreement, a "Change in Control" of
the Company shall be deemed to have occurred if:
(i) any Person (as defined below) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), directly or indirectly, of securities
of the Company representing 25% or more of the combined voting power of the
Company's then outstanding securities;
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(ii) during any period of no more than two consecutive
years (not including any period prior to the execution of this Agreement)
individuals who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who has entered into
an agreement with the Company to effect a transaction described in clause (i),
(ii) or (iv) of this definition) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or whose nomination for
election was previously so approved, cease for any reason to constitute at least
a majority thereof;
(iii) the stockholders of the Company approve a merger
or consolidation of the Company with any other entity, other than (a) a merger
or consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 75% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (b) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
Person acquires 25% or more of the combined voting power of the Company's then
outstanding securities; or
(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.
As used in this Agreement, the term "Person" has the meaning given such
term in Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) of the Exchange Act, but excludes (x) the Company, (y) any
trustee or other fiduciary holding securities under an employee benefit plan of
the Company (or of any subsidiary of the Company) and (z) any corporation owned,
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company.
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8.3. The Executive's right to terminate his employment
pursuant to clause (viii) of Section 8.1 shall be exercised, if at all, by
written notice within one hundred twenty (120) days of the date of Change in
Control.
9. DISCHARGE FOR CAUSE
9.1. The Company shall have the right to terminate the
employment of the Executive for Cause. In the event that prior to the
Termination Date the Executive's employment is (a) terminated by the Company for
Cause, as hereinafter defined, or (b) by the Executive other than for Good
Reason or (c) other than as a result of Permanent Disability or death, the
Executive shall be entitled to receive all salary, bonuses, and benefits to
which the Executive is entitled or which have accrued up to and including the
effective date of the Executive's termination of employment hereunder. All
bonuses and similar amounts shall accrue through the date of termination. If the
Company follows the procedures specified in this Section 9, in the case of the
termination of the Executive's employment for Cause, the Company's obligation
under this Agreement to make any further payments, or provide any benefits
specified herein, to the Executive shall thereupon cease and terminate. As used
herein, the term "Cause" shall mean (i) the willful and continued failure by the
Executive to substantially perform his duties with the Company (other than such
failure resulting from his incapacity due to physical and mental illness or any
such actual or anticipated failure resulting from his termination for Good
Reason), after a demand for substantial
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performance is delivered to the Executive by the Board of Directors of the
Company which specifically identified the manner in which the Board of Directors
believe that the Executive has not substantially performed his duties, or (ii)
the willful engaging by the Executive in conduct which is demonstrably and
materially injurious to the Company or Subsidiary, monetarily or otherwise, or
(iii) the Executive's willful and continued personal dishonesty, breach of
fiduciary duty involving personal profit, or conviction of a felony (other than
minor traffic violations). For purposes of this Section, no act or failure to
act on the Executive's part shall be considered "willful" unless done, or
omitted to be done, by the Executive not in good faith and without reasonable
belief that his action or omission was in the best interest of the Company or
Subsidiary. Termination of the Executive's employment pursuant to this Section 9
shall be communicated by a Notice of Termination. For purposes of this Agreement
a "Notice of Termination" shall mean delivery to the Executive of a copy of a
resolution duly adopted by the affirmative vote of not less than a majority of
the entire membership of the Company's Board of Directors at a meeting of the
Board called and held for the purpose (after reasonable notice to the Executive
and reasonable opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board prior to such vote), finding that in the
good faith opinion of the Board that any event constituting Cause for
termination in accordance with this Section 9 has occurred and specifying the
particulars thereof in detail. For purposes of this Agreement, no
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such purported termination of the Executive's employment shall be effective
without such Notice of Termination.
10. NO OBLIGATION TO MITIGATE DAMAGES
10.1. The Executive shall not be required to mitigate damages
or the amount of any payment provided for under this Agreement by seeking other
employment or otherwise, nor shall the amount of any payment provided for under
this Agreement be reduced by any compensation earned by the Executive as the
result of employment by another employer after the termination of his employment
hereunder or otherwise, except to the extent set forth in Section 6.2 of this
Agreement. In addition, the Company shall reimburse the Executive on a quarterly
basis for all costs and expenses incurred by the Executive to enforce or protect
his rights under this Agreement unless it shall ultimately be determined by a
final judgment of a court of competent jurisdiction that the Executive was
without any justification for commencing or continuing any such action or
proceedings. In the event of such final judgment, the Executive shall repay to
the Company any amounts of reimbursement paid under this Section 10.
11. NONCOMPETITION
(a) During the Employment Term and provided the Company
performs its obligations hereunder, for a period of one (1) year thereafter, the
Executive shall not, directly or indirectly become under contract to or
associated with, employed by, render services to or own an interest (other than
as a shareholder owning
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not more than a 5% interest) in any business that is then in competition with
the Company or Subsidiary.
(b) The necessity for protection of the Company and its
affiliates against the Executive's competition, as well as the nature and scope
of such protection, has been carefully considered by the parties hereto in light
of the uniqueness of the Executive's talent and his importance to the Company.
Accordingly, the Executive agrees that, in addition to any other relief to which
the Company may be entitled, the company shall be entitled to seek and obtain
injunctive relief (without the requirement of any bond) from a court of
competent jurisdiction for the purpose of restraining the Executive from any
actual or threatened breach of the covenant contained in this Section 11. If for
any reason a final decision of any court determines that the restrictions under
this Section 11 are not reasonable or that consideration therefor is inadequate,
such restrictions shall be interpreted, modified or rewritten by such court to
include as much of the duration, scope and geographic area identified in this
Section 11 as will render such restrictions valid and enforceable.
12. INDEMNIFICATION; DIRECTORS & OFFICERS INSURANCE
12.1. The Company agrees to indemnify the Executive and agrees
to cause Subsidiary and each other wholly-owned subsidiary to indemnify the
Executive to the fullest extent permitted under the applicable laws of Delaware
and Rhode Island, respectively. Such indemnification shall be in no way
exclusive of any other right of indemnification to which the Executive may be
entitled.
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12.2. The Company shall use its best efforts as soon as
practical to obtain and thereafter during the Employment Term maintain
directors' and officers' liability insurance with limits of at least $1,000,000
under policies and issued by a company or companies reasonably acceptable to the
Executive.
13. CONFIDENTIALITY
13.1. The Executive shall not intentionally disclose or reveal
to any unauthorized person, during or for a three (3) year period after the
employment Term any trade secret or other confidential information relating to
the Company or Subsidiary, or any of their respective businesses or principals,
that has not been previously disclosed or revealed, and the Executive confirms
that such information is the exclusive property of the Company and Subsidiary.
14. NOTICES
14.1. All notices or communications hereunder shall be in
writing, addressed to each party at its or his address set forth above. Any such
notice or communication shall be sent certified or registered mail, return
receipt requested, postage prepaid, or by prepaid nationally-recognized courier
service addressed as above (or to such other address as such party may designate
in writing from time to time), and the actual date of receipt, as shown by the
receipt therefor, shall determine the time at which notice was given.
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15. SEPARABILITY
15.1. If any provision of this Agreement shall be declared to
be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
16. ASSIGNMENT
16.1. This Agreement shall be binding upon and inure to the
benefit of the heirs and representatives of the Executive and the assigns and
successors of the Company, but neither this Agreement nor any rights hereunder
shall be assignable or otherwise subject to hypothecation by the Executive;
provided, however, that no such assignment by the Company without the
Executive's consent shall release the Company from any of its obligations
hereunder.
17. ENTIRE AGREEMENT
17.1. This Agreement represents the entire agreement of the
parties and shall supersede any and all previous contracts, arrangements or
understandings between the Company and the Executive; provided however, that the
benefits provided for in this Agreement are in addition to and shall in no way
reduce or diminish any right to which he is otherwise entitled that is already
accrued for or granted to the Executive pursuant to a plan, program or
arrangement of the Company. The Agreement may be amended at any time by mutual
written agreement of the parties hereto.
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18. GOVERNING LAW
18.1. This Agreement shall be construed, interpreted, and
governed in accordance with the laws of Rhode Island.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed and the Executive has hereunto set his hand, as of the day and year
first above written.
INFINITE MACHINES CORP.
By /s/
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/s/
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Xxxxxxxx X. Xxxxxxxxx
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