EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of July 1, 1998, by and between ENTEX
Information Services, Inc., a Delaware corporation (the "Company"), and Dort X.
Xxxxxxx III ("Executive").
W I T N E S S E T H :
WHEREAS, Executive has been employed by the Company and has served as
Chairman of the Board of Directors of the Company;
WHEREAS, the Company desires to secure the continued services of Executive
and to enter into an agreement embodying the terms of such service arrangements
(the "Agreement"); and
WHEREAS, Executive desires to accept such employment and enter into such
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the Company and Executive hereby agree as follows:
1. Employment.
(a) Agreement to Employ. Upon the terms and subject to the conditions of
this Agreement, the Company shall hereby continue to employ Executive, and
Executive hereby agrees to continue in the employ of the Company.
(b) Term of Employment. Except as provided in Paragraph 5, the Company
shall employ Executive for the period commencing on July 1, 1998 (the
"Commencement Date") and ending on the third anniversary of the Commencement
Date ("Employment Period").
2. Position and Duties.
During the Employment Period, Executive shall serve as an employee of the
Company in such position or positions as Executive and the Board of Directors of
the Company (the "Board") shall from time to time agree. During the Employment
Period, the Company shall use its best efforts, including nominating Executive
on the management slate, to have Executive elected and continued as Chairman of
the Board. Executive's duties hereunder shall be consistent with his duties with
the
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Company on the Commencement Date. During his employment hereunder, Executive
shall devote the amount of his time reasonably required for him to perform the
services required of him hereunder, except for vacation time and reasonable
periods of absence due to sickness, personal injury or other disability, and
shall use his best efforts and judgment to perform, improve and advance the
business and interests of the Company in a manner consistent with the duties of
his position. Nothing contained herein shall preclude Executive from (i) serving
on the board of directors of any business corporation with the consent of the
Board, (ii) serving on the board of or working for any charitable or community
organization or (iii) pursuing his personal financial and legal affairs, so long
as such activities, individually or collectively, do not materially interfere
with the performance of Executive's duties hereunder.
Unless Executive consents otherwise in writing, Executive's services
hereunder shall be performed at his office in Greenwich, Connecticut, subject to
such reasonable travel as the performance of Executive's duties and the business
of the Company may require.
3. Compensation.
(a) Base Salary. The Company shall pay Executive a base salary at the
annual rate of $400,000. Executive's base salary shall be subject to increase
from time to time at the discretion of the Board, and any such increase shall
not reduce or limit any other obligation of the Company hereunder. Executive's
annual base salary payable hereunder, as it may be increased from time to time
is referred to herein as "Base Salary." The Company shall pay Executive his Base
Salary in equal biweekly installments on the Company's regular pay dates.
(b) Incentive Compensation. Executive will be eligible to participate in
the Company's existing and future annual and long term incentive compensation
programs (including any stock option or other stock-based compensation program)
at a level determined from time to time by the Board.
4. Benefits and Perquisites, Expenses.
(a) Benefits. During the term of this Agreement, Executive shall be
eligible to participate in any welfare benefit plan of the Company, including,
without limitation, any group life, hospitalization, medical, dental, health,
accident or disability insurance or similar plan or program of the Company, now
existing or established hereafter, in accordance with
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and to the extent that Executive is eligible under the general provisions
thereof. Executive shall also be eligible to participate in any pension, profit
sharing, retirement, deferred compensation, and savings plans of the Company now
existing or established hereafter, in accordance with and to the extent that
Executive is eligible under the general provisions thereof. Notwithstanding the
foregoing, the group life insurance benefits provided to Executive on the
Commencement Date shall continue to be provided to Executive through the
Employment Period, and Executive and the Company shall pay their respective
portions of the cost of such coverage at rates in effect for senior executives.
Notwithstanding the foregoing, the hospitalization, medical, dental and health
coverage provided to Executive and his dependents on the Commencement Date (the
"Medical Coverage") shall continue to be provided to Executive and his
dependents on the same terms through the Employment Period, and the Company
shall continue to provide such Medical Coverage on the same terms to Executive
and his spouse for the remainder of their lives; provided, however, that the
Company will not be obligated to provide post-employment Medical Coverage to the
Executive or his spouse, as the case may be, if such person becomes eligible for
comparable coverage from another employer or comparable coverage can be obtained
at commercially reasonable rates for such person; provided further, however,
that the Company's obligation to provide post-termination Medical Benefits to
Executive and his dependents shall cease if, and when, the actual cost of such
coverage to the Company (determined as set forth below) exceeds $1.5 million.
The Medical Benefits costs which count toward the $1.5 million cap are those
which are allocable to coverage after the Executive's termination of employment
with the Company; provided, however, that in the case of termination of
Executive's employment due to Disability (as defined below) or death,
involuntary termination not for Cause (as defined below) or termination by the
Executive for Good Reason (as defined below), the Medical Benefits costs which
count toward the $1.5 million cap are those beginning on the later of (i) the
first anniversary of termination of employment or (ii) the end of the Employment
Period (determined without regard to early termination under Paragraph 5 below).
(b) Perquisites. Executive shall be entitled to up to six weeks paid
vacation time annually in accordance with the Company's policy. Executive shall
also be entitled to receive such other perquisites as are generally provided to
senior executives of the Company in accordance with the policies of the Company
and at the discretion of the Board. In addition, the Company shall provide
Executive with the use of an automobile
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selected by Executive with annual lease payments, insurance and maintenance
costs of no more than $24,000. To the extent the annual lease payments,
insurance and maintenance costs of such automobile exceed $24,000, Executive
shall be responsible for such costs.
(c) Business Expenses. The Company shall pay or reimburse Executive for all
reasonable expenses incurred or paid by Executive in performance of Executive's
duties hereunder, including first class travel, upon presentation of expense
statements or vouchers or such other supporting information as the Company may
reasonably require.
(d) Indemnification. The Company shall indemnify Executive and hold
Executive harmless from and against any claim, loss or cause of action arising
from or out of Executive's performance as an officer, director or employee of
the Company or any of its subsidiaries or in any other capacity in accordance
with the Indemnification Agreement between Executive and the Company dated
August 1, 1996.
5. Termination of Employment. The Employment Period shall terminate on the
first to occur of Executive's death, termination due to Disability, termination
by the Company for or without Cause or termination by Executive for or without
Good Reason.
(a) Termination Due to Death. In the event Executive's employment is
terminated due to death, Executive's spouse, if she survives Executive, or
otherwise Executive's estate, shall be entitled to receive the Base Salary at
the time of death in biweekly installments on the Company's regular pay dates
for the longer of (i) the remainder of the Employment Period without regard to
earlier termination under this Paragraph 5 or (ii) one year.
(b) Termination Due to Disability. In the event Executive's employment is
terminated due to Disability (as defined below), Executive shall be entitled to
receive the Base Salary at the time of Disability in equal biweekly installments
on the Company's regular pay dates for the longer of (i) the remainder of the
Employment Period without regard to earlier termination under this Paragraph 5
or (ii) one year.
For purposes of this paragraph "Disability" shall mean that for a period of
four consecutive months or for an aggregate of more than six months in any
twelve month period Executive is incapable of substantially fulfilling the
positions,
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authorities and responsibilities set forth in this Agreement, because of
physical, mental or emotional incapacity resulting from injury, sickness or
disease. Any question as to the existence, extent or potentiality of Executive's
Disability upon which Executive and the Company cannot agree shall be determined
by a qualified, independent physician selected by the Company and approved by
Executive (which approval shall not be unreasonably withheld). The determination
of any such physician shall be final and conclusive for all purposes of this
Agreement. Executive or his legal representative or any adult member of his
immediate family shall have the right to present to such physician such
information and arguments as to Executive's Disability as he, she or they deem
appropriate, including the opinion of Executive's personal physician.
(c) Termination by the Company for Cause. Executive may be terminated for
"Cause" by the Company. "Cause" shall mean (i) Executive is convicted of a
felony involving moral turpitude, (ii) action by Executive involving willful
malfeasance or gross misconduct in connection with his employment hereunder
having a material adverse effect on the business of the Company, or (iii)
substantial and continual refusal by Executive in breach of this Agreement to
perform the duties ordinarily performed by a person in Executive's position or
other duties assigned to Executive pursuant to the terms hereof. Executive shall
be permitted to respond and defend himself before the Board within thirty days
after written notification of any proposed termination for Cause which shall
specify in detail the reasons for such termination. If the Board does not
confirm by a three-fourth's affirmative vote (excluding the Executive) that the
Company had grounds for termination for Cause, Executive shall have the option
to treat his employment as not having terminated or as having been terminated by
the Company Without Cause.
In the event of a termination for Cause, Executive shall not be entitled to
receive any termination benefits under this Agreement other than Executive's
Base Salary through the date his employment terminates paid on the next regular
pay date of the Company. However, Executive and his spouse shall continue to
receive Medical Benefits as set forth in Paragraph 4(a) above.
(d) Termination Without Cause or For Good Reason. A termination "Without
Cause" shall mean a termination of employment by the Company other than due to
Disability or for Cause. A termination for "Good Reason" shall mean a
termination of employment by Executive following the occurrence of one or more
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of the following without Executive's written consent: a reduction in his annual
Base Salary; a material alteration in his authorities or responsibilities; the
failure to elect or continue Executive as a Chairman of the Board of Directors
of the Company; the failure to maintain directors and officers liability
insurance covering Executive; or a material breach of this Agreement by the
Company. Notwithstanding the foregoing, a termination shall not be treated as a
termination for Good Reason unless Executive shall have delivered a written
notice to the Board within 90 days of his having actual knowledge of the
occurrence of one of such events stating that he intends to terminate his
employment for Good Reason as a result of one of such events and such event, if
capable of being cured, shall not be cured within 30 days of the receipt of the
notice.
In the event of a termination Without Cause or a Termination for Good
Reason, Executive shall be entitled to receive the Base Salary at the time of
termination in equal biweekly installments on the Company's regular pay dates
for the longer of (i) the remainder of the Employment Period without regard to
earlier termination under this Paragraph 5 and (ii) one year.
6. Additional Rights. Nothing in this Agreement shall limit or otherwise
affect such rights as Executive may have under any contract or agreement with
the Company or any of its affiliated companies. Amounts which are vested
benefits or which Executive is otherwise entitled to receive under any plan,
policy, practice or program of or any contract or agreement with the Company or
any of its affiliated companies at or subsequent to the date of termination
shall be payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
7. Full Settlement. The Company's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any circumstances, including, without limitation, any
set-off, counterclaim, recoupment, defense or other right which the Company may
have against Executive or others. In no event shall Executive be obligated to
seek other employment by way of mitigation of the amounts payable to Executive
under any of the provisions of this Agreement or, if he obtains other
employment, to set-off from amounts payable under this Agreement any
remuneration paid or payable to Executive on account of such other employment.
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8. Noncompetition, Nonsolicitation and
Confidentiality.
(a) Noncompetition. Executive hereby covenants and agrees that from the
date hereof until three (3) years after the termination of his employment
hereunder (the "Non-Compete Period") he shall not, directly or indirectly, own,
operate, manage, join, control, participate in the ownership, management,
operation or control of, or be paid or employed by, or acquire any securities
of, or otherwise become associated with or provide assistance to, as an
employee, consultant, director, officer, shareholder, partner, agent, associate,
principal, representative or in any other capacity, any business entity or
activity which is directly or indirectly a "Competitive Business" (as
hereinafter defined); provided, however, that the foregoing shall not prevent
Executive from (a) performing services for a Competitive Business if such
Competitive Business is also engaged in other lines of business and if
Executive's services are restricted to employment in such other lines of
business; or (b) acquiring the securities of or an interest in any Competitive
Business, provided such ownership of securities or interests represents at the
time of such acquisition, but including any previously held ownership interests,
less than two percent (2%) of any class or type of securities of, or interest
in, such Competitive Business. The term "Competitive Business" shall mean and
include any business or activity that is substantially the same as any business
or activity then conducted by the Company, regardless of where such Competitive
Business is located.
(b) Nonsolicitation. Unless Executive has obtained the prior written
consent of the Company, he hereby covenants and agrees that, from the date
hereof until the expiration of the Non-Compete Period, he shall not, for or on
behalf of a Competitive Business, directly or indirectly, as owner, officer,
director, stockholder, partner, associate, consultant, manager, advisor,
representative, employee, agent creditor or otherwise, attempt to solicit or in
any other way disturb or service any person, firm or corporation that has been a
customer account of the Company at any time or times prior to the termination of
his employment hereunder, whether or not he at any time had any direct or
indirect account responsibility for, or contact with, such customer account.
(c) Confidentiality. Without the prior written consent of the Company,
except to the extent required by an order of a court having competent
jurisdiction or under subpoena from an appropriate government agency, Executive
shall not disclose
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any trade secrets, customer lists, drawings, designs, information regarding
product development, marketing plans, sales plans, manufacturing plans,
management organization (including data and other information relating to
members of the Board and management), operating policies and manuals, business
plans, financial records, packaging design or other financial, commercial,
business or technical information relating to the Company or any of its
subsidiaries (collectively, "Confidential Information"), to any third person
unless such Confidential Information has been previously disclosed to the public
by the Company or is otherwise in the public domain.
(d) Company Property. Promptly following Executive's termination of
employment, Executive shall return to the Company all property of the Company
and its subsidiaries, and all copies thereof in Executive's possession or under
his control, including, without limitations all products or prototypes delivered
to Executive for testing or evaluation and all Confidential Information in
whatever media such Confidential Information is maintained.
(e) Injunctive Relief with Respect to Covenants. Executive acknowledges and
agrees that the covenants and obligations of Executive with respect to
noncompetition, nonsolicitation, confidentiality and Company property relate to
special, unique and extraordinary matters and that a violation of any of the
terms of such covenants and obligations will cause the Company irreparable
injury for which adequate remedies at law are not available. Therefore,
Executive agrees that the Company shall be entitled to an injunction,
restraining order, or other equitable relief from any court of competent
jurisdiction restraining Executive from committing any violation of the
covenants and obligations with respect to noncompetition, nonsolicitation,
confidentiality and Company property. These injunctive remedies are cumulative
and are in addition to any other rights and remedies the Company may have at law
or in equity. In connection with the foregoing provision of this paragraph,
Executive represents that his economic means and circumstances are such that
such provisions will not prevent him from providing for himself and his family
on a basis satisfactory to him.
9. Governing Law and Arbitration.
(a) Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be resolved by binding arbitration. The arbitration
shall be held in the city of New York, New York and except to the extent
inconsistent
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with this Agreement shall be conducted in accordance with the Voluntary Labor
Arbitration Rules of the American Arbitration Association then in effect at the
time of the arbitration.
(b) Governing Law. This Agreement shall be governed by the laws of the
State of New York, determined without regard to the principles of conflict of
laws thereof.
10. Miscellaneous.
(a) Survival. Paragraphs 4(a) (relating to benefits), 4(d) (relating to
indemnification), 5 (relating to termination), 8 (relating to noncompetition,
nonsolicitation and confidentiality) and 9 (relating to governing law and
arbitration) shall survive the termination hereof.
(b) Binding Effect. This Agreement shall be binding on the Company and any
successors thereto. This Agreement shall also enure to the benefit of
Executive's heirs, executors, administrators and legal representatives.
(c) Assignment. Except as provided under Paragraph 10(b) (relating to
binding effect), neither this Agreement nor any of the rights or obligations
hereunder shall be assigned or delegated by any party hereto without the prior
written consent of the other party.
(d) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters referred to herein.
(e) Severability Reformation. In the event that one or more of the
provisions of this Agreement shall become invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the remaining
provisions contained herein shall not be affected thereby. In the event
Paragraph 8 is not enforceable in accordance with its terms, Executive and the
Company agree that such Paragraph should be reformed to make such Paragraph
enforceable in a manner which provides the Company the maximum rights permitted
at law.
(f) Waiver. Waiver by any party of any breach or default by the other party
of any of the provisions of this Agreement shall not operate as a waiver of any
other breach or default, whether similar to or different from the breach or
default waived. No waiver of any provision of this Agreement shall be implied
from any course of dealing between the parties
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hereto or from any failure by either party hereto to assert its or his rights
hereunder on any occasion or series of occasions.
(g) Notices. Any notice required or desired to be delivered under this
Agreement shall be in writing and shall be delivered personally, by courier
service or by registered mail, return receipt requested, and shall be effective
upon actual receipt by the party to which such notice shall be directed, and
shall be addressed as follows (or to such other address as the party entitled to
such notice shall hereafter designate in accordance with the terms hereof):
If to the Company:
ENTEX Information Services, Inc.
Six International Drive
Rye Brook, NY 10573-1058
Attention: General Counsel
If to Executive:
Dort X. Xxxxxxx, III
The Airlie Group
000 X. Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
(h) Amendments. This Agreement may not be altered, modified or amended
except by a written instrument signed by each of the parties hereto.
(i) Headings. Headings to paragraphs in this Agreement are for the
convenience of the parties only and are not intended to be part of or to affect
the meaning or interpretation hereof.
(j) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
(k) Withholding. Any payments provided for herein shall be reduced by any
amounts required to be withheld by the Company from time to time under
applicable Federal, State or local income tax laws then in effect.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer, and Executive has hereunto set his hand as of the
day and year first above written.
ENTEX INFORMATION SERVICES, INC.
WITNESS:
By: /s/ Xxxx X. XxXxxxx, Xx.
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Xxxx X. XxXxxxx, Xx.
President
WITNESS:
By: /s/ Dort X. Xxxxxxx III
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Dort X. Xxxxxxx III
