EMPLOYMENT AGREEMENT
AGREEMENT, dated as of December 31, 1998, between Eastbrokers
International, Inc., a Delaware corporation ("Company") and Xxxxxx X. Xxxxxxxxxx
("Employee").
WHEREAS, the Employee is currently serving as Chairman, Chief Executive
Officer and President of the Company;
WHEREAS, the parties desire to enter into this Agreement setting forth the
terms and conditions for the employment relationship of the Employee with the
Company;
WHEREAS, the Board of Directors of the Company ("Board") has approved and
authorized the entry into this Agreement with the Employee;
NOW, THEREFORE, it is AGREED as follows;
1. EMPLOYMENT. During the term of this Agreement the Employee shall be
employed as Chairman, Chief Executive Officer and President of the Company. The
Employee shall render executive policy and other management services to the
Company of the type customarily performed by persons serving in similar
executive officer capacities. The Employee shall devote such portion of his
working time to the Company as is reasonably necessary to the business of the
Company. During the term of this Agreement, there shall be no material increase
or decrease in the duties and responsibilities of the Employee otherwise than as
provided herein, unless the parties otherwise agree in writing. The Company
shall use its best efforts during the term of this Agreement to cause die
Employee to be elected to the Board.
2. COMPENSATION.
(a) SALARY. The Company agrees to pay the Employee during the term
of this Agreement A salary at an annual rate equal to $240,000, with such
subsequent increases in salary during the term of this Agreement as may be
determined by the board. In determining salary increases, the Board may
compensate the Employee for increases in the cost of living and may also provide
for performance or merit increases. The salary of the Employee shall not be
decreased at any time during the term of this Agreement from the amount then in
effect unless the Employee otherwise agrees in writing. Participation in
deferred compensation, discretionary bonus, retirement and other employee
benefit plans and in fringe benefits shall not reduce the salary payable to the
Employee under this Section 2(a). The salary under this Section 2(a) shall be
payable to the Employee not less frequently than monthly. The Employee shall not
be entitled to receive fees for serving as a director of the Company or of any
subsidiary or affiliate of the Company or for serving as a member of any
committee of any such board of directors.
(b) PERFORMANCE BONUS. In addition to his salary under Section 2(a)
above, the Company will pay to the Employee a quarterly Performance bonus of 1%
of total revenue of the Company in excess of $6,000,000 per quarter. The
performance bonus shall be payable 30 days following the filing of the Company's
quarterly 10-Q and Annual Report 10-K.
3. LONG TERM STOCK INCENTIVE. In consideration for Employee entering into
this five year employment Agreement, the Company has deemed it advisable and in
the best interests of the Company that it enter into an Agreement with Employee
relating to the sale of shares of stock in the Company, whereby, the Company
agrees to sell to Employee 200,000 shares of its Common Stock, par value $.05,
of the Company at a price of $3.00 per share in exchange for Employee issuing to
the Company a Promissory Note in the amount of $600,000 with principal and
interest on the Note payable to the Corporation five years from the making of
said Note.
3. DISCRETIONARY AND PERFORMANCE INCENTIVE BONUSES. During the term of this
Agreement, the Employee shall be entitled to participate in an equitable manner
with all other executive employees of the Company in such discretionary bonuses
as may be authorized, declared and paid by the Board to its executive employees.
4. INSURANCE, RETIREMENT AND EMPLOYEE BENEFIT PLANS: FRINGE BENEFITS:
BUSINESS EXPENSES.
(a) LIFE INSURANCE. The Company will pay the premiums on a life
insurance policy on the life of the Employee providing a death benefit of not
less than $1,000,000 ("Policy"). The Company will be the owner of such life
insurance policy1 and upon the death of the Employee, the Company would be paid
from the insurance proceeds an amount equal to the total premiums it paid under
the Policy, with the remaining proceeds to be paid to the Employee's designated
beneficiary
(b) OTHER BENEFITS AND PERQUISITES. The Employee shall be entitled
to participate in any plan of the Company relating to stock options, restricted
stock, employee stock purchase or ownership, pension, thrift, profit sharing,
group life insurance, medical coverage, education or other retirement or
employee benefit plans or arrangements that the Company has adopted or may adopt
for the benefit of its employees or executive officers. The Employee shall also
be entitled to participate in, or enjoy the benefit of; any other fringe
benefits or perquisites that are now or may be OF become applicable to the
Company's executive employees. 1~he Employee shall also be provided with the use
of a suitable automobile at Company expense and will be entitled to have access
to and use, consistent with the rules and regulations of such facility, a club
membership to be obtained in the name of the Company. The Employee shall account
to the Company for the business use of such automobile and club.
(c) BUSINESS EXPENSES. During the term of the employee's
employment by the Company5 the Company shall promptly reimburse the Employee for
all reasonable and customary expenses incurred by the Employee in performing
services for the Company, including all expenses of travel and living expenses
while away from home on business or at the request of and in the service of the
Company, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures established by the Company.
5. TERM. The initial term of employment under this Agreement shall be for
the five-year period from the date hereof. This Agreement shall be automatically
renewed for an additional five-year term, unless either Employee or the Company
gives contrary written notice to the other party hereto not less than 10 days
before the scheduled expiration of the term of this Agreement. Each term and all
such renewed terms are collectively referred to herein as the term of this
Agreement.
6. VOLUNTARY ABSENCES: VACATIONS. The Employee shall be entitled, without
loss of pay1 to be absent voluntarily for reasonable periods of time from die
PERFORMANCE of the duties and responsibilities under this Agreement. All such
voluntary absences shall count as paid vacation time, unless the Board otherwise
approves. The Employee shall be entitled to an annual paid vacation of at least
six weeks per year or such longer period as the Board may approve. The timing of
paid vacations shall be scheduled in a reasonable manner by the Employee.
7. TERMINATION OF EMPLOYMENT. The Employee's employment may be terminated
without any breach of this Agreement only under the following circumstances:
(a) DEATH. The Employee's employment shall terminate upon his
death.
(b) DISABILITY. The Company may terminate the Employee's employment
because of disability. For this purpose, "Disability" shall MEAN the inability
of the Employee to perform his duties under this Agreement because of physical
or mental illness or incapacity for a continuous period of six months during
which the Employee shall have been absent from his duties under this Agreement
on a substantially full-time basis.
(c) CAUSE. The Company may terminate the Employee's employment for
Cause. For purposes of this Agreement, the Company shall have "Cause" to
terminate the Employee's employment only in the event of (l) the willful and
continued failure by the Employee t" substantially perform his duties hereunder
(other than any such failure resulting from the Employee's inability to perform
such duties as a result of physical or mental illness or incapacity or any such
actual or anticipated failure after the delivery of a Notice of Termination, as
defined in Section 7(c), by the Employee for Good Reason, as defined in Section
7(dX2)), AFTER delivery to the Employee of a written demand for substantial
performance that specifically identifies the manner in WHICH the Company
believes that the Employee has not substantially performed his duties and a
reasonable opportunity to cure; (2) willful misconduct by the Employee that
causes substantial and material injury to the business and operations of the
Company, the continuation of which, in the reasonable judgment of the Board,
will continue to substantially and materially injure the business and operations
of the Company in the future; or (3) conviction of the Employee of a felony. No
act or failure to act shall be considered "willful" for this purpose unless
done, or omitted to be done, by the Employee other than in good faith and other
than with a reasonable belief that his action or omission was in the best
interests of the Company. The Employee shall not be deemed to have been
terminated for Cause unless the Employee shall have been provided with (i) a
reasonable notice setting forth the reasons that the Company believes constitute
Cause for the termination of his employment; (ii) a Notice of Termination as
defined in Section 7(e), from the Board finding that, in the reasonable good
faith opinion of the Board1 Cause for the termination exists and specifying the
particulars thereof in reasonable detail. In the event that the Employee's
employment has been terminated by the Company for Cause and the Employee
disputes in good faith whether such Cause has occurred, the Company shall
continue to make to the employee the payments contemplated by this Agreement as
if his employment had not been terminated upon the Company's receipt of a
written undertaking by the Employee to repay to the Company any amounts to which
it is ultimately determined that he was not entitled under this Agreement.
(d) TERMINATION BY THE EMPLOYEE.
(1) The Employee may terminate his employment (A) for Good
Reason by giving ten days prior written notice to the Company or (B) at any time
by giving 120 days prior written notice to the Company.
(2) For this purposes, "Good Reason" shall mean (A) the
assignment to THE Employee of any duties inconsistent with the Employee'5 titles
and duties as set forth in Section I of this Agreement or any substantial
adverse alteration in the nature or status of the Employee's responsibilities;
(B) any change in the Employee's reporting responsibility such that the Employee
is required to report other than exclusively to the Board; (C) any purported
termination of the Employee's employment by the Company that is not effected
pursuant to a Notice of Termination satisfying the requirements of Section 7(e)
hereof; (D) any other failure by the Company to comply with any material
provision of this Agreement which failure continues for more than ten days after
written notice of such noncompliance from the Employee; or (E) any notices given
by the Company to the Employee under Section 5 hereof that this Agreement will
not be renewed on any anniversary date.
(e) NOTICE OF TERMINATION. Any termination OF the Employee's
employment by the Company or by the Employee (other than termination pursuant to
Section 7(a) hereof shall he communicated to the other party by a written Notice
of Termination. Any Notice of Termination given by a party shall specify the
particular termination provision of this Agreement relied upon by such party and
shall set forth in reasonable detail the facts and circumstances relied upon as
providing a basis for the termination under the provisions specified.
(f) TERMINATION DATE. The Termination Date shall mean (1) if the
Employee's employment is terminated by his death, the date of his death; (2) if
the Employee's employment is terminated pursuant to Section 7(b) hereof, the
date specified in the Notice of Termination, which shall be after the expiration
of the six-month period specified in that subsection; or (3) if (he Employee's
employment is terminated by the Company for Cause, the date specified in the
Notice of Termination.
8. COMPENSATION UPON TERMINATION OF EMPLOYMENT.
(a) TERMINATION BECAUSE OF DEATH FOR CAUSE OR WITHOUT GOOD REASON.
If the Employee's employment is terminated because of his death, by the Company
for Cause or by the Employee other than for Good Reason, the Company shall pay
the Employee his salary and a pro rata portion of the bonus s-led in Section 2~)
based upon the bonus paid in respect of the preceding year) through the
Termination Date and the Company shall have no further obligation to the
Employee hereunder.
(b) TERMINATION BECAUSE OF DISABILITY. If the Employee's employment
is terminated by the Company because of Disability under Section 7(b) hereof the
Company shall pay the Employee an annual disability benefit equal to the excess
of (l) 60 percent of his salary at the rate in effect under Section 2(a) hereof
on the Termination Date plus 60 percent of the bonus amount specified in Section
2(b) hereof (based upon the bonus paid in respect of the preceding year) over
(2) the amount of the long term disability benefit that is payable to the
Employee under any policy of disability insurance provided for the Employee by
the Company at its expense. The disability benefit shall be paid for such period
as is determined by the Board for the Company's senior executives but shall not
be less than the remainder of the scheduled term of employment.
(c) TERMINATION WITHOUT CAUSE OR WITH GOOD REASON. If (i) in breach
of this Agreement, the Company shall terminate the Employee's employment other
than (A) for Cause or ('3) because of Disability or (ii) the Employee shall
terminate his employment for Good Reason; then:
(1) The Company shall pay the Employee his salary and a pro
rata portion of the bonus specified in Section 2(b) hereof based upon the bonus
paid in respect of the preceding year) through the Termination Date and all
other unpaid and pro rata amounts to which the Employee is entitled as of the
Termination Date under any compensation plan or program of the Company,
including, without limitation, any incentive performance bonus and all accrued
va~4tiOn time;
(2) The Company shall pay as liquidated damages to the
Employee, and in lieu of any further salary payments hereunder for periods after
the Termination Date, the Employee's then current salary (payable in
installments in accordance with the Company's normal payroll practices) for the
remainder of the scheduled term of employment and the product of (A) the sum of
(i) the Employee's annual bonus specified in Section 2(b) hereof (based upon the
bonus paid in respect of the preceding year) and (ii) the maximum annual bonus
amount that could have been paid to the Employee under the Company's performance
incentive bonus plan for the year in which the Termination Date occurs, and (B)
the number of years (and any fraction of a year) remaining in the term of this
Agreement under Section 5 hereof as of the Termination Date, which amount shall
be payable in equal monthly installments during the remainder of the scheduled
term of employment;
(3) In addition to the liquidated amounts that &e payable to
the Employee, the following shall apply: (A) the Employee shall continue to
participate in, and accrue benefits under, all retirement, pension, profit
sharing, employee stock ownership, thrift and other deferred compensation plans
of the Company for the remaining term of this Agreement as if the tenn1.~ation
of employment of the Employee had not occurred (with the Employee being deemed
to receive annually for the purposes of such plans the Employee's then current
salary and bonus (at the time of his termination) under Section 2(a) and (b) of
this Agreement), except to the extent that such continued participation and
accrual is expressly prohibited by law or to the extent such plan constitutes a
"qualified plan" under Section 401 of the Internal Revenue Code of 1986, as
amended ("Code"), by the terms of the plan, in which case the Company shall
provide the Employee a substantially equivalent, unfunded, non-qualified
benefit; (B) the Employee shall be entitled to continue to receive all other
employee benefits and then existing fringe benefits referred to in Section 4(a)
and (b) hereof for the remaining term of this Agreement as if the termination of
employment had not occurred; and (C) all insurance or other provisions for
indemnification, defense or hold-harmless of officers or directors of the
Company that are in effect on the date the Notice of Termination is sent to the
Employee shall continue for the benefit of the Employee with respect to all of
his acts and omissions while an officer or director as fully and completely as
if such termination had not occurred,
and until the final expiration or running of all periods of limitation against
action which may be applicable to such acts or omissions; and
(4) The liquidated amount and other benefits provided for in
this Section 8(c) shall not be reduced by any compensation or benefits that the
Employee may receive for other employment with another employer or through self
employment after termination of employment with the Company.
(d) COST OF ENFORCEMENT. In the event the employment of the Employee
is terminated by the Company because of Disability or without Cause, or by the
Employee for Good Reason, and the Company fails to make timely payment of the
amounts owed to the Employee under this Agreement, the Employee shall be
entitled to reimbursement for all reasonable costs, including attorney's fees,
incurred by the Employee in taking action to collect such amounts or otherwise
to enforce this Agreement, plus interest on such amounts at the rate of one
percent above the prime rate (defined as the base rate on corporate loans at
large U.S. money center commercial banks as published by THE WALL STREET
JOURNAL, compounded monthly, for the period from the date of employment
termination until payment is made to the Employee. Such reimbursement and
interest shall be in addition to all rights. to which the Employee is otherwise
entitled under this Agreement.
(e) PARACHUTE PAYMENT LIMITATION. If any payment or benefit to the
Employee under this Agreement would be considered a "parachute payment" within
the meaning of Section 280G(b)(2) of the Code and if; after reduction for any
applicable federal excise tax imposed by Section 4999 of the Code ("Excise Tax")
and federal income tax imposed by the Code. the Employee's net proceeds of the
amounts payable and the benefits provided under this Agreement would be less
than the amount of the Employee's net proceeds resulting from the payment of the
Reduced Amount described below, after reduction for federal income taxes, then
the amount pay able and the benefits provided under this Agreement shall be
limited to the Reduced Amount. The "Reduced Amount" shall be the largest amount
that could be received by the Employee under this Agreement such that no amount
paid to the Employee under this Agreement and any other agreement, contract or
understanding heretofore or hereafter entered into between the Employee and the
Company ("Other Agreements") and any formal or informal plan or other
arrangement heretofore or hereafter adopted by the Company for the direct or
indirect provision of compensation to ~e Employee (including groups or classes
of participants or beneficiaries of which the Employee is a member)! whether or
not such compensation is deferred, is in cash, or is in the form of a benefit to
or for die Employee ("Benefit Plan") would be subject to the Excise Tax. In the
event that the amount payable to the Employee shall be limited to the Reduced
Amount, then the Employee shall have the right, in the Employee's sole
discretion, to designate those payments or benefits under this Agreement, any
other Agreements, and/or any Benefit Plans, that should be reduced or eliminated
so as to avoid having the payment to the Employee under this Agreement be
subject to the Excise Tax.
9. CONFIDENTIALITY. In consideration of the willingness of the
Company to employ the Employee and the compensation to bc paid and benefits
to be received therefore, any for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the Employee agrees as
follows:
(a) THE COMPANY OWNS ALL OF THE EMPLOYEE'S WORK. All improvements,
discoveries, inventions, designs, documents, licenses and patents, or other data
devised, conceived, made, developed, obtained, filed, perfected, acquired, or
first reduced to practice, in whole or in part, or in the regular course of
employment by the Employee during the term of this Agrcemcnt9 and related in any
way to the business, including development and research) of the Company or any
subsidiary or affiliate engaged in business substantially similar to that of the
Company shall be promptly disclosed to the Company. The Employee hereby assigns
and transfers to the Company all his right, interest and title thereto, and such
improvements, discoveries, inventions1 designs, documents, licenses and patents,
or other data shall become the property of the Company. During the term of this
Agreement and at any time thereafter) upon request of the Company, the Employee
will join and render assistance in any proceedings and execute any papers
necessary to file and prosecute applications for, and to acquire) maintain and
enforce, letters patent, trademarks, REGISTRATIONS and/or copyrights, both
domestic and foreign, with respect to such improvements, discoveries,
inventions, designs, documents, licenses and patents, or other data as required
for vesting and maintaining title to same in the Company.
(b) NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. The Employee
agrees and acknowledges that the term "Confidential and Proprietary Information"
shall mean any and all information not in the public domain, in any form,
emanating from or relating to the Company and its subsidiaries and affiliates,
including, but not limited to, trade secrets, technical information, costs,
designs, drawings, processes systems, methods of operation and procedures,
formulae, test data, know-how, improvements, price lists, financial data, code
books, invoices and other financial statements, computer programs, discs and
printouts, sketches, and plans (engineering, architectural or otherwise),
customer lists, telephone numbers, names, addresses, information about equipment
and processes (including specifications and operating manuals), or any other
compilation of information written or unwritten that is used in the business of
the Company or any subsidiary or affiliate that gives the Company or any
subsidiary or affiliate any opportunity to obtain an advantage over competitors
of tile Company who do not know or use such information. The Employee agrees and
acknowledges that all Confidential and Proprietary Information, in any form, and
all copies and extracts thereof, is and are and shall remain the sole and
exclusive property of the Company and, upon termination of his employment with
the Company, the Employee hereby agrees to return to the Company the originals
and all copies of any Confidential and Proprietary information provided to or
acquired by the Employee during the period of his employment. E~cept as ordered
by a court of competent jurisdiction, the Employee expressly agrees never to
disclose to any person (except to other Company employees, and then only On a
"need to know" basis) or entity any Confidential and Proprietary Information
either during the term of this Agreement or at any lime after termination of his
employment, except with the express written authorization and consent of the
Company.
(c) CUSTOMERS' INFORMATION. The Employee understands and
acknowledges that each customer of the Company or its subsidiaries or affiliates
will disclose information that will be within the Company's control in
connection with the Company's furnishing of services to its customer. The
Employee covenants and agrees to hold such information in the strictest
confidence and shall treat such information in the same manner and be obligated
by tile provisions of this Agreement as if such information were Confidential
and Proprietary Information, as defined in Section 9(b) hereof
10. COVENANT NOT TO COMPETE. During the term of employment, the employee
shall not directly or indirectly own, manage, operate, control or be employed by
Of participate in the ownership, management, operation or control of any
business which is of the type and character engaged in and competitive with that
of the Employer. The Employee shall not, during the term of this Agreement, have
any other paid employment other than with a subsidiary or affiliate of the
Company, except with the prior approval of the Hoard; provided, however, that
the Employee shall be permitted to serve as a director on the boards of other
corporations.
11. AMENDMENTS OR ADDITIONS; ACTION BY BOARD. No amendments or additions
to this Agreement shall be binding unless in writing and signed by all parties
hereto. The prior approval by a majority affirmative vote of the full Board
shall be required in order for the Company to authorize any amendments or
additions to this Agreement, to give any consents or waivers of provisions of
this Agreement, or to take any other action under this Agreement including any
Notice of Termination.
12. MISCELLANEOUS.
(a) NOTICES. Any notice required or permitted hereunder shall be
given in writing and shall be personally delivered or mailed by first class
registered or certified mail, postage prepaid, return-receipt-requested, or
transmitted by facsimile or reputable overnight courier, addressed to the
Company or the Employee at the addresses set forth on the signature page of this
Agreement1 Or at such other addresses as such xxxxx may designate by five
business days advance written notice to the other party.
Each notice or communication that shall have been transmitted in
the manner described above shall be deemed sufficiently served, sent or received
for all purposes at such time as it is sent to the addressee or at such time as
delivery is refused by the addressee upon presentation.
(b) SEVERABILITY. Nothing in this Agreement shall be construed so as
to require the commission of any act contrary to law and wherever there is any
conflict between any provision of this Agreement and any law, statute,
ordinance, order or regulation, the latter shall prevail, but in such event any
necessary action will be taken to bring it within applicable legal requirements.
If any provision of this Agreement should be held invalid or unenforceable, the
remaining provisions shall be unaffected by such a holding.
(c) COMPLETE AGREEMENT. This Agreement contains the entire
Agreement and understanding between the parties relating to the subject matter
hereof, and supersedes any prior understandings, agreements or representations
by or between the parties, written or oral, relating to the subject matter
hereof
(d) SUCCESSORS AND ASSIGNS. This Agreement and the rights and
obligations of the parties hereto shall bind and inure to the benefit of any
successor or successors of the Company by way of reorganization, merger or
consolidation and any assignee of all or substantially all of its business and
assets, but except as to any such successor or assignee of the Company, neither
this Agreement nor any rights or benefits. hereunder may be assigned by the
Company or the Employee.
However, in the event of the death of the Employee, all rights to receive
payments hereunder shall become rights of the Employee's estate.
(e) SECTION HEADINGS. The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement.
(f) GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
on the day and year first above written,
Czech Industries, Inc. Employee
0000 X Xxxxxx XX
Xxxxx 000
Xxxxxxxxxx, XX 00000
/s/ Xxxxx X. XxXxxx /s/ Xxxxxx X. Xxxxxxxxxx
By:------------------------------------- --------------------------------
Authorized Officer Xxxxxx X. Xxxxxxxxxx
