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EXHIBIT 10.8
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made as of April 1, 2001, and has been entered into
between InterSystems, Inc., a Delaware corporation with its principal offices at
0000 Xxxxxxx 00, Xxxxxx Xxxx, Xxx Xxxxxx (hereinafter, together with its
subsidiaries, called the "Employer" or "Company", except where otherwise
specifically referenced) and Xxxxxx X. Xxxxx, Xx. (hereinafter called the
"Employee").
WHEREAS, Employer desires to employ the Employee on the terms and
conditions set forth herein; and
WHEREAS, the Employee desires to be employed by the Employer on the
terms and conditions set forth herein, now therefore the Employer and Employee
agree as follows:
1. Employment: The Employer hereby employs the Employee, and the
Employee hereby accepts employment, upon the terms and conditions hereinafter
set forth.
2. Term: Subject to the provisions of termination as hereinafter
provided, the term of this Agreement shall begin on April 1, 2001 and shall
terminate on March 31, 2006 (being five (5) years after the commencement
date)(the "Original Term"). Commencing in the year 2003 Employer shall, on or
before March 31, 2003, give Employee notice if it does not wish to extend
Employee's employment for an additional year beyond the Original Term. If the
Employer does not give written notice to Employee during this period or any year
thereafter, Employee shall continue in the employ of the Employer for an
additional year (the "Extended Term"). The Extended Term provides Employee with
not less than a 3-year evergreen term of employment. During any Extended Term,
the terms of Employee's employment will be as set forth in this Agreement and as
amended in writing from time-to-time, including Employer's obligation to give
notice if Employer will not renew Employee's employment for an Extended Term. If
Employer gives written notice of its decision not to renew Employee's
employment, Employee will continue in the employ of Employer for three (3) years
on the terms set forth in this Agreement, as amended (the "Term"). At the end of
the Original Term, or any Extended Term, Employer will pay Employee a severance
payment equal to one-twelfth (1/12) of Employee's most recent annual salary and
bonus compensation multiplied by the total number of years Employee was employed
by Employer (or an affiliate) with ten (10) years of service agreed to having
been accrued as of the date hereof (the "Severance Payment"). If Employee should
die during any Term of this agreement or the "severance" pay period,
compensation shall be paid to his estate for the period of the time remaining,
but not in excess of 24 months. At the end of any Term of Employment hereby, if
Employee is offered to continue his employment, but refuses to accept such
continuation, Employee, at his option, shall then, if able, act as a consultant
to Employer for two (2) years at annual compensation of 50% of his last annual
salary and incentives, and if Employee has elected to so continue as a
consultant, he shall dedicate approximately 50% of his work- related hours to
the Employer and shall not perform any services, consulting or otherwise, for
any company, person or entity that competes directly with Employer's businesses.
3. Compensation: The following payments and incentives are granted to
and will be made to Employee for services rendered hereunder:
(a) The Employer will pay the Employee an annual salary of
$185,000, payable bi-monthly (the "Base Salary"), which Base Salary
will be increased each calendar year to reflect the percentage increase
in the Consumer Price Index for the New York metropolitan area for the
most recently completed year (the "CPI"), and other increases, from
time-to-time, as may be approved by the Company's Board of Directors.
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(b) Employee will receive the following annual bonus
compensation, paid quarterly, at the minimum level during the year then
occurring:
(i) The greater of $20,000 per annum; or
(ii) 5% of the consolidated pre-tax profits of
the Company.
(c) Stock Incentives. Employee is hereby granted the following
rights and benefits as considerations for entering into this Agreement
and for providing the services required hereunder:
(i) A grant of 100,000 common stock purchase
options, each entitling Employee to purchase
one share of the Company's Common Stock at a
price of $.25 per share and expiring on
March 31, 2011. Such options shall be
immediately exercisable and shall be
evidenced by a stock option agreement
containing such terms and provisions (in
addition to those set forth herein) as are
customarily contained in options granted to
the Company's other employees
(ii) A grant of an aggregate of 300,000 common
stock purchase options which shall expire on
March 31, 2011 and shall not become
exercisable until October 1, 2010, such
options are granted in six groups, of 50,000
options each, ,each option entitling the
Employee to purchase one share of the
Company's Common Stock at the respective
exercise price set forth below and becoming
exercisable at an earlier date subject to
the Company's attaining the respective
earnings set forth below. The options within
each group will become exercisable at an
earlier date pro rata based upon the extent
to which the respective earnings threshold
is exceeded. As an example, when the Company
has had cumulative pre-tax earnings during
the term of this Employment Agreement of
$250,000, 25,000 of the options having an
exercise price of $.25 will become
exercisable; when the Company has had
cumulative pre- tax earnings during such
term of $1,500,000, a total of 150,000
options will be exercisable, consisting of
all of the options having an exercise price
of $.25 per share, all of the options having
an exercise price of $.50 per share and all
of the options having an exercise price of
$.75 per share. Once any such options have
become exercisable, they will not thereafter
become unexercisable as a result of
subsequent losses the Company may incur. For
purposes of this agreement, the Company's
pre-tax earnings for a particular period or
periods shall consist of the Company's
earnings, determined on a consolidated
basis, and as reflected in its reports that
it files with the Securities and Exchange
Commission, before payment of all local,
state and federal income taxes, but after
deduction of all other expenses allocable to
such period or periods. For purposes of
determining the number of such options that
are exercisable hereunder, the Company's
cumulative pre-tax earnings for the term of
this Agreement shall be determined at the
end of each of the Company's fiscal quarters
during such term. Such options shall be
evidenced by a stock option agreement
containing such terms and provisions (in
addition to those set forth herein) as are
customarily contained in options granted to
the Company's other employees.
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Earlier Exercisability Pro -Rata
Based Upon Pre-tax Earnings
Number of Options Exercise Price During Term of Contract
----------------- -------------- -----------------------
50,000 $ .25 $0 - 500,000
50,000 $ .50 $500,001 - $1,000,000
50,000 $ .75 $1,000,001 - $1,500,000
50,000 $1.00 $1,500,001 - $2,000,000
50,000 $1.25 $2,000,001 - $2,500,000
50,000 $1.50 $2,500,001 - $3,000,000
The foregoing stock incentives shall be protected against any dilution resulting
from stock splits or any other reclassifications affecting the Company's common
stock.
(d) Management Payment: If, at any time during the term of
this Agreement, (i) the stockholders, called to elect the Company's
Board of Directors, do not elect individuals as recommended by Coast
Capital Partners, LLC. ("Coast Capital") to a majority of the seats on
the Board of Directors, or (ii) the common stock of the Company is
acquired through a tender offer, contract purchase or otherwise such
that at the next meeting of stockholders that is called to elect the
Company's Board of Directors, Coast Capital, either directly or through
appointees, does not control a majority of the seats on the Company's
Board of Directors, or (iii) substantially all of the assets of the
Company are sold (hereinafter (i) - (iii) referred to as a
"Transaction"), such that the value of the Transaction (less deduction
for associated expenses) is in excess of the amount equal to two times
the Company's book value at December 31, 2000, plus the Company's after
tax profits for each fiscal quarter since December 31, 2000 (for
purposes of this calculation, "Net Worth"), the Employee shall receive
from the Company a cash payment equal to the greater of (i) 1% of the
amount by which the value of the Transaction exceeds the Net Worth
(such payment hereinafter referred to as the "Net Worth Payment") or
(ii) 2X the average of all forms of the Employee's compensation from
Employer, its subsidiaries and affiliated companies over the last three
(3) years (the "Management Payment"). The Management Payment shall not
be paid in lieu of any other payment required to be paid to Employee
hereunder, but in addition to such payments, and this Agreement shall
remain in full force and effect after such payment. Any Management
Payment to be made hereunder shall be made in cash within a reasonable
period of time, but not to exceed sixty (60) days from the closing date
of the Transaction.
4. Extent of Services and Duties: The Employee is employed as President
and Chief Executive Officer of the Company. His duties shall be consistent with
the responsibilities of such office. He shall be responsible for all day-to-day
operations related to such office. Employee shall perform activities related to
such office as assigned to him by the Company's Board of Directors. Employee
shall not be required to relocate his chosen place of residence to perform his
duties under this Agreement.
5. Vacation: The Employee shall be entitled each year to a vacation of
four (4) weeks during which time his compensation shall be paid in full and all
benefits shall remain in effect.
6. Fringe Benefits and Expenses: The Employee shall be entitled to
participate on the same basis, except where stated otherwise in this Agreement,
and subject to the same qualifications as other executives of the Employer, in
any pension, profit sharing, stock purchase, savings, hospitalization, sick
leave and other fringe benefit plans in effect from time to time with respect to
executives of the Employer (the "Fringe Benefits"). The Employer agrees that
each of the Fringe Benefits of the Employer in effect on the date hereof, or at
any time during the Employment Period, shall not be terminated or modified in
any manner which reduces the benefits of the Employee without first obtaining
the written consent of the Employee. The Employee is entitled to reimbursement,
upon presentation of vouchers indicating the amount and purpose, for reasonable
expenses incurred on behalf of the Employer.
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7. Disability: In the event that the Employee shall have been
prevented from substantially rendering the services required under this
Agreement by reason of his disability (as confirmed by medical authority and
Social Security guidelines) for a period of sixty (60) consecutive days,
Employer shall have the right to terminate this Agreement upon thirty (30) days'
written notice provided such disability continues during said notice period. If
the Employer terminates this Agreement as a result of Employee's disability,
Employee will receive from Employer, until 65 years of age, monthly disability
payments in an amount equal to the greater of 60% of Employee's final Base
Salary or $15,000 per month (which shall include any disability payments from
state or federal authorities), as well as the severance payment then applicable
and as set forth in paragraph 2 hereof. In order to cover this payment, Employer
will purchase such disability insurance under which the Employee is the insured
and beneficiary which will cover not less than 80% of the payment required to be
made under this provision.
8. Termination:
(a) Termination for Employee's Breach: Employer shall have the
right to terminate this Agreement and the employment hereunder if
Employee violates his responsibilities under paragraph 4 of this
Agreement after having received notice of such violation from
Employer's Board of Directors which notice shall set forth how Employee
would cure the expressed violation and thirty (30) days to take
measures to cure such violations as proposed by Employer's Board of
Directors. At such time as the Employer's Board of Directors addresses
such charges, Employee notified of the impending discussion and the
arguments to be made for termination and Employee may submit a written
response of such claims which shall be read to all Directors at the
meeting. Employer may immediately terminate this Agreement and the
employment hereunder by reason of (i) determination by Employer's Board
of Directors that there has been a defalcation of the Employer's funds
by Employee, but such termination may not be immediate if amounts that
are in question relate to expenses that have been deemed by Employee to
be business expenses. If the Board finds that such expenses were not
business related, Employee shall, within 30 days, reimburse the Company
for such amounts, (ii) conviction of Employee on a felony charge, or
(iii) a panel from the American Arbitration Association determines with
Employee having the right to argue his case that Employee has had
unauthorized discussions of Employer's business activities or
improperly disclosed trade secrets or confidential information
concerning Employer's business activities or proposed business
activities and which discussions are found to have an immediate,
material adverse effect on Employee.
(b) Termination for Employer's Breach: Employee shall have the
right to terminate this Agreement if the Employer materially breaches
any of the provisions hereof and such breach is not cured within thirty
(30) days after the Employer receives written notice from Employee
thereof. In such event, or in the event of a wrongful termination of
Employee, all monies due to Employee through the term of the Agreement
shall be paid by Employer in a lump sum amount within thirty (30) days
of Employee's termination, with bonuses to be paid when earned and the
Severance Payment to be immediately paid. Employee shall have no
obligation to mitigate his loss or damages occasioned as a result of
such termination.
9. Confidential and Proprietary Information: Employee agrees to keep
secret all confidential information, trade secrets or proprietary
information acquired by him/her during his/her employment concerning
the business and affairs of the Employer (the "Information") and
further agrees for a period of one (1) year after the termination of
his/her employment, for any reason, not to disclose any such
Information to any person, firm or corporation other than as directed
by Employer, unless and until such Information becomes known outside of
Employer (other than through any violation by the Employee of his/her
obligation hereunder). Employee also agrees, upon request by Employer,
to execute a confidential non-disclosure agreement if Employer has same
prepared to protect the confidentiality of certain information relating
to the Company.
10. Miscellaneous Provisions:
(a) Notices and Communications: All notices and communications
hereunder shall be in writing and shall be hand delivered or sent
postage prepaid by registered or certified mail, return receipt
requested,
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to the addresses first above written or to such other address of which
notice shall have been given in the manner herein provided.
(b) Entire Agreement: All prior agreements and understandings
between the parties with respect to the subject matter of this
Agreement are superceded by this Agreement and this Agreement
constitutes the entire understanding between the parties with respect
to employment of the Employee by Employer, and Employer and Employee
hereby release the other from any claims or amounts due under said
prior agreements. This Agreement may not be modified, amended, changed
or discharged, except by a writing signed by the parties hereto and
then only to the extent therein set forth.
(c) Non-Assignment: This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and any administrator,
executor and successor of Employer. This Agreement may not be assigned
by either of the parties hereto without prior written consent of the
other party.
(d) Waiver: No waiver of any breach of this Agreement or of
any objection to any act or omission connected herewith shall be
implied or claimed by any party, or be deemed to constitute a consent
to any continuation of such breach, act or omission, unless in a
writing signed by the party against whom enforcement of such waiver or
consent is sought, and then only to the extent set forth therein.
(e) Section Headings: The section headings of this Agreement
are solely for the purpose of convenience and shall neither be deemed a
part of this Agreement nor used in any interpretation thereof.
(f) Governing Law: This Agreement and the relationship of the
parties hall be governed by and construed in accordance with the laws
of the State of New Jersey.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of April 1, 2001.
ATTEST: INTERSYSTEMS, INC.
______________________________ By:________________________________
Name: Name:
Title:
WITNESS:
______________________________ ___________________________________
Name: Employee
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