1
EXHIBIT 10.27
EMPLOYMENT AGREEMENT
(XXXXXXX X. XXXXXXXXX)
This Employment Agreement (the "Agreement") is made to be effective as of
the 1st day of January, 1997 and is by and between Xxxxxxx Xxxxxxxxx, whose
address is 0000 Xxxxxxx Xxxx XX, Xxxxxxxx, Xxxxxxxxxx 00000 ("You" or the
"Executive") and Automated Register Systems, Inc., a Delaware corporation with
its principal office at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000
(the "Company" or "ARS"). Where appropriate in the context, the term "Company"
shall also mean and include the Company and its parents, subsidiaries and
affiliates.
In consideration of the mutual agreements and promises hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company agrees to employ you and you agree
to serve as an employee of the Company upon the following terms and conditions:
1. Condition Precedent.
This Agreement and the parties' respective rights and
obligations set forth herein are conditioned in their entirety on
the filing of Certificates of Merger in the States of Delaware and
Washington by Company and Bristol Merger Corporation ("BMC"),
pursuant to which Company shall merge into BMC in a tax free
reorganization pursuant to Section 368(a)(2)(D) of the Internal
Revenue Code of 1986, as amended.
2. Term.
Subject to the other terms and conditions of this Agreement,
the initial term of your employment hereunder (the "Term") will be
for the three (3) year period commencing January 1, 1997 and ending
December 31, 1999, unless earlier terminated in accordance with this
Agreement. Notwithstanding the foregoing, your obligations under
Section 8(b) and 9 below shall survive the expiration or termination
of this Agreement.
3. Position; Duties; etc.
(a) Your title shall be President and it shall be your
responsibility to perform all functions generally appropriate to
such a position at all times in a lawful and professional manner
which reflects positively upon the Company and serves its best
interests, and such other reasonable duties as may be assigned by
the Company's Board of Directors. In this capacity, you shall report
to the
1
2
Company's Board of Directors. The Company shall also recommend to
the shareholder of the Company that you be elected as a member of
the Company's Board of Directors for a one-year term commencing at
the next annual meeting of the Company's shareholders. You shall
perform substantially all of your duties, at the Company's sole and
exclusive discretion, at the ARS office located as set forth above.
The Company reserves the right to change your duties and your
position from time to time, and to require you to relocate, as may
be necessary or appropriate and in the best interests of the
Company.
(b) You will, to the best of your abilities, effectively,
diligently, in good faith and with integrity, devote your full time,
attention, energy and skill to the fulfillment of your duties
hereunder and shall at all times be promotive and supportive of the
Company, its products, services, management and other employees, at
a level of competence and effectiveness consistent with the position
occupied.
(c) You will be subject to and will comply with such policies and
procedures as are from time to time established for employees of the
Company generally, except to the extent that such policies or
procedures are inconsistent with the express terms of this
Agreement, and in those instances, the terms of this Agreement shall
control.
(d) You shall carefully monitor all aspects of the business,
properties and affairs of ARS. Without limiting the generality of
the foregoing, it shall be your duty to notify the Company promptly
upon becoming aware of any matter which constitutes or which might
constitute a breach of any representation, warranty or covenant of
Company and/or Shareholders (as such terms are defined in the Merger
Agreement) under that certain Agreement and Plan of Merger, dated
December 12, 1996 by and among Bristol Technology Systems, Inc., a
Delaware corporation ("Bristol"), BMC, Company and Shareholders (the
"Merger Agreement"). Nothing herein shall in any manner be construed
to limit the duties and obligations that you have as a director and
an officer of ARS or the Company under applicable State law or the
applicable articles of incorporation or bylaws of ARS or the
Company.
4. Compensation and Benefits
(a) Salary. As remuneration for your services and provided you
remain employed and are fulfilling your duties hereunder, during the
Term the Company will pay you, in accordance with Company policies,
a gross salary calculated at the rate of One Hundred Thirty Thousand
Dollars ($130,000) per year, payable in arrears in substantially
equal installments on the Company's regular pay days, less any
withholding of tax or any amounts required by law to be withheld and
less any payments for fringe benefits or payments and contributions
as may otherwise be
2
3
authorized by you or required under employee benefit plans
maintained from time to time by the Company.
(b) Bonus. With respect to each year of the Term, and provided you
have been employed during the entire year, you shall be eligible to
earn an annual bonus, payable in arrears, determined as of the end
of ARS's fiscal year, in an amount equal to Ten percent (10%) of
ARS's(1) pretax profits for each year which are in excess of Three
Hundred Eighty-Four Thousand Six Hundred Six Dollars and Seventy-Two
Cents ($384,606.72) (the "Baseline"). For this purpose, pre-tax
profits shall be calculated in accordance with generally accepted
accounting principles and reduced for (i) no interest expense paid
by ARS with respect to any loans or advances, including any
inter-company interest expense, other than (A) interest expense on
indebtedness incurred by ARS in the ordinary course of business, and
(B) interest expense on indebtedness incurred by ARS in connection
with acquisitions by ARS, which acquisitions are approved by
Executive; and (ii) any management fees paid to or charged by
Bristol (not to exceed 5% of ARS's annual net revenues), but shall
not be reduced by bonuses paid pursuant to this Agreement or the
Employment Agreements with any of the other Shareholders (as defined
in the Merger Agreement) and shall not be reduced by any lease rate
escalations paid to the lessors under the lease referenced in
Section 6.2 of the Merger Agreement.
5. Expenses.
The Company will reimburse you for all reasonable, ordinary
and necessary travel (except normal travel between home and office)
and other out-of-pocket expenses incurred by you for the purpose of
and in connection with performing your duties, subject to proper
submission of substantiating documentation, and subject further to
all Company policies respecting expense reimbursement, as the same
may vary from time to time.
6. Employee Benefit Programs.
(a) Benefit Programs. You shall be entitled to participate in or
receive benefits under all benefit programs, arrangements or
perquisites which the Company maintains generally from time to time
for its executive employees.
(b) Vacation. You shall be entitled to four (4) weeks of paid
vacation per year during the Term.
--------
(1) See Attachment 1
3
4
7. Consequences of Termination of Employment.
(a) Death/Disability. In the event of your death during the Term,
your employment hereunder shall be terminated as of the date of your
death and your designated beneficiary, or, in the absence of such
designation, your estate or other legal representative
(collectively, the "Estate") shall be paid your unpaid salary
through the date occurring on the earlier of three (3) months from
the date of death or the expiration of the Term of this Agreement.
Other death benefits that do not overlap the foregoing will be
determined in accordance with the terms of the Company's benefits
programs and plans maintained from time to time by the Company for
its executive employees. In the event you are mentally or physically
disabled for a period of four or more consecutive months
("disability" being defined as a mental or physical impairment or
condition which substantially and effectively prevents you from
performing your duties hereunder), or for any 120 days during any
twelve month period during the Term, your employment may be
terminated on written notice to you. In such event, your salary
shall be continued for a period of two (2) months following the
effective date of termination. Other than the salary set forth in
this subsection (a), you or your estate shall not be entitled to any
other payment or benefit by reason of your death or disability.
(b) Termination of Employment by the Company for Cause. The Company
shall have the right to terminate your employment and this Agreement
for Cause and nothing herein, or in any other agreement between you
and the Company or ARS shall prevent the Company from terminating
your employment for Cause. In the event you are terminated for
Cause, you shall be paid your salary through the date of termination
and shall be entitled to those rights and benefits you may have
earned through the date of termination in respect of benefits under
any employee benefit plans or programs of the Company maintained
from time to time by the Company for its executive employees as
determined in accordance with the terms of such plans or programs,
as the case may be.
(c) Cause Defined. The Company shall have "cause" to terminate your
employment hereunder prior to the end of the original Term hereof
for:
(i) gross negligence, willful misconduct, or breach of
fiduciary duty to the Company,
(ii) failure by the Company to achieve one-half (1/2) of the
Baseline for any two (2) consecutive quarters during the Term,
(iii) drug or alcohol use or addiction which materially
interferes with the performance of your duties at any time,
(iv) illegal, immoral or dishonest conduct,
4
5
(v) your breach or failure to perform any of the provisions of
this Agreement, the Merger Agreement, ancillary or related
agreements thereto, or any present or future agreement between
you and the Company respecting non-competition or the
ownership or protection of confidential information,
inventions, patents, trademarks, copy-rights or other
intellectual properties,
(vi) your voluntary termination of employment prior to
expiration of the Term.
8. Covenants Regarding Confidential Information and Proprietary Rights.
(a) Confidential Information Defined. As used herein, "Confidential
Information" means all proprietary information, trade secrets and
any non-public information, oral and written, and any document or
media containing such information, concerning the Company or used by
the Company in the operation of its business, including, without
limitation, any of the Company's actual or prospective customers,
suppliers, contractors and co-venturers or concerning any actual or
planned discoveries, inventions, developments, improvements,
technology, know-how, processes, products, services, businesses,
business opportunities, operations, activities or plans of or
belonging to the Company (including, without limitation, technical
formulae and designs, computer hardware and software, databases,
original works of authorship, customer lists, bills of material,
business plans, financial information, trade secrets and other
proprietary information) provided that Confidential Information
shall not include such portion of the aforesaid information which
has become of hereafter becomes public knowledge within the business
equipment industry through no fault of your own.
(b) Confidentiality. It is understood and agreed that prior to and
during the Term you have, and will become aware of, Confidential
Information, the unauthorized disclosure of which may harm the
Company. Accordingly, you agree that, except as expressly authorized
by the Company or as reasonably necessary in order to fulfill your
duties under this Agreement, both during and after the Term, you
will never communicate, divulge or use for the benefit of yourself
or any other person or entity, directly or indirectly, any
Confidential Information discovered, conceived of, or disclosed,
communicated or in any manner obtained by you or coming into your
possession prior to or during the Term. Upon termination of this
Agreement for whatever reason or whenever requested by the Company,
you will promptly deliver to the Company, and shall retain no copies
of, all documents, media, records or other materials containing
Confidential Information which are in your possession or under your
control. Further, you agree that you will not, during your
employment with the Company, improperly use or disclose any
proprietary information or trade secret of any former or concurrent
employer, and that you will not bring onto the premises of the
Company any unpublished
5
6
document or any property belonging to any such former or concurrent
employer unless consented to in writing by such former or concurrent
employer.
(c) The Company. For purposes of this Section 7, the term "Company"
shall include any parent, subsidiary, affiliated company or business
predecessor to the Company.
9. Covenant Not to Compete.
For a period of three (3) years from and after the expiration or
earlier termination of this Agreement, within the states of
Washington, Idaho, Oregon or Northern California (the "Territory")
the Executive will not: (i) directly or indirectly enter into the
employ of, or render any service to, or act in concert with, any
person, partnership, corporation or other business entity (other
than the Company or its Affiliates) engaged in any business or in
the rendering of any service of the type being conducted or rendered
by the Company at any time during the Term (a "Competitive
Business"); or (ii) directly or indirectly engage in any such
Competitive Business on his own account; or (iii) become interested
in any such Competitive Business, directly or indirectly, as an
individual, partner, shareholder, director, officer, principal,
agent, employee or in any other relationship or capacity; provided,
that the purchase of a publicly traded security of a corporation,
partnership or other entity engaged, or which becomes engaged, in
such business or service shall not in itself be deemed violative of
this Agreement so long as Executive does not own, directly or
indirectly, more than 1% of the securities of such corporation,
partnership or other entity. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this
Section 9 is invalid or unenforceable, the parties agree that the
court making the determination of invalidity or unenforceability
shall have the power to reduce the scope, duration, or area of the
term or provision, to delete specific words or phrases, or to place
any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified
after the expiration of the time within which the judgment may be
appealed. Executive agrees that the running of restricted period of
competition shall be tolled for any period during which Executive is
in breach of the covenants set forth in this Section 9.
10. Equitable Relief.
Executive agrees that the Company may not be adequately
compensated by damages for a breach by Executive of any of the
covenants contained in Sections 8 and 9, and agrees that, in the
event of a breach or threatened breach by Executive of any provision
of Section 8 or 9 below, the Company shall be entitled to enforce
the covenants contained in Section 8 or 9 by specific performance
and to enjoin or restrain any such breach or threatened breach
(without the necessity of
6
7
posting a bond or other security in any action initiated for such
relief), but nothing herein shall be construed as prohibiting the
Company from pursuing any remedy available to the Company for such
breach or threatened breach.
11. Notices.
Any notice to be given under this Agreement by either party
shall be in writing and hand delivered (by courier or otherwise) or
mailed via first class mail and by certified or registered mail with
return receipt requested, and addressed to the other party at its
address at the head of this Agreement or at such other address as
such other party shall have given notice to the first party in
accordance with the provisions of this Section.
12. Non-Waiver of Rights.
The failure to enforce, at any time, any of the provisions of
this Agreement or to require, at any time, performance by the other
party of any of the provisions hereof shall in no way be construed
to be a waiver of such provisions or to affect either the validity
of this Agreement, or any part hereof, or the right of either party
thereafter to enforce each and every provision in accordance with
the terms of this Agreement. Any waiver of any provision of this
Agreement shall be valid only if in writing signed by the party so
waiving, and no waiver of a provision hereof in any given instance
shall operate as a waiver of such provision in any other instance or
the waiver of any other provision of this Agreement.
13. Severability.
The invalidity or inability to enforce any particular
provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provision were omitted.
14. Assignment.
This Agreement shall be binding upon, and shall inure to the
benefit of, you and the Company and their respective executors,
administrators, heirs, successors and permitted assigns. This
Agreement shall not be assignable by you, in whole, or in part,
without the written consent of the Company.
15. Governing Law.
The validity, interpretation and construction hereof shall be
governed by and construed and enforced in accordance with the laws
of the State of Washington, excepting any rule thereof which would
refer such matters to the law of any other jurisdiction.
7
8
16. Miscellaneous.
This Agreement embodies the entire agreement of the parties
with respect to the matters within its scope and supersedes any
prior oral or written agreements and understandings of the parties
respecting same. This Agreement shall not be modifiable except in
writing signed by both parties hereto, and the provisions hereof
shall override any contrary or conflicting provisions in any
acknowledgment, invoice or other document unilaterally issued by
either party. The headings contained in this Agreement have been
inserted solely for convenience of reference and shall be of no
force or effect in the construction or interpretation of the
provisions of this Agreement. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument.
The remedies available to the Company for breach of this Agreement
shall be cumulative, and nothing herein shall prevent the Company
from pursuing any such remedies, whether inconsistent or otherwise.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
on its behalf by its duly authorized representative, and you have signed this
Agreement, as of the day and year first above written.
------------------------------------------
Xxxxxxx X. Xxxxxxxxx
Automated Register Systems, Inc., a
Delaware corporation
By:
--------------------------------------
Its:
--------------------------------------
8
9
ATTACHMENT 1
In addition to the specified percentage bonus to be paid to You pursuant
to Subsection 4(b) hereunder, You shall be entitled to receive each year, in the
discretion of President of ARS, an addition bonus payment; provided, however,
that the sum of all bonuses (both fixed and discretionary) to be paid to You and
the other Shareholders, as defined in the Merger Agreement, shall not exceed
Twenty-Five Percent (25%) of ARS's pretax profits (as calculated pursuant to
Subsection 4(b) hereof) in excess of the Baseline.
